Analysis of EUR/USD 5M

The EUR/USD currency pair traded with minimal volatility on Tuesday, although it received some support from the British pound. The British currency plummeted yesterday due to another unfortunate statement from Chancellor Rachel Reeves, which also caused the euro to begin falling. However, the euro quickly rebounded as traders recalled that the UK's problems pertain to the British pound, not the euro. As a result, we first saw a sharp drop in quotes followed by an equally sharp rise. However, this "sharp drop" was only 40 pips, and practically all movements for the day occurred within the range of 1.1604-1.1666.

The macroeconomic background in the Eurozone and the U.S. was once again virtually absent. In Germany, the consumer confidence index was published, which came in lower than even the most pessimistic forecasts for November, but it is clear that this index was not the cause of the euro's decline in the early part of the day. From a technical perspective, the upward trend on the hourly timeframe remains intact following a strong and prolonged correction. A new trend line has been formed, but the European currency is still in no hurry to rise, and the market is hesitant to trade.

On the 5-minute timeframe, evaluating trading signals made little sense, since all movements for the day occurred within a 60-pip range that contained four levels and two lines. Whenever a certain signal was formed, the price immediately met new resistance.

COT Report

The latest COT report for the British pound is dated September 23. Since then, no further COT reports have been published due to the U.S. "shutdown." The illustration shows that the net position of non-commercial traders has been "bullish" for a long time, with bears barely managing to move into their own zone of supremacy at the end of 2024 before quickly losing it. Since Trump took office as President of the U.S. for a second time, the dollar has consistently been falling. We cannot say with 100% certainty that the dollar's decline will continue, but current developments around the world suggest this is a possibility.

We still do not see any fundamental factors supporting the strengthening of the European currency, while there are significant factors for the decline of the American dollar. The global downward trend persists, but does it even matter where the price has moved in the last 17 years? Once Trump concludes his trade wars, the dollar may begin to appreciate, but recent events have demonstrated that the conflict will continue in one form or another. The potential loss of independence for the Fed stands as another strong factor putting pressure on the U.S. currency.

The positioning of the red and blue lines of the indicator continues to indicate a "bullish" trend. Over the last reporting week, the number of long positions in the non-commercial group decreased by 800, while short positions increased by 2,600. Consequently, the net position decreased by 3,400 contracts over the week. However, this data is outdated and holds no significance.

Analysis of EUR/USD 1H

On the hourly timeframe, the EUR/USD pair could have completed its downward trend as far back as the week before last. However, in recent times, the European currency has only declined, making it still quite challenging to find explanations that do not border on science fiction. We believe that the main reason for the inadequate and illogical movements is the flat on the daily timeframe, which continues. In recent days, the euro has shown some growth, but it has not yet managed to break through the area of 1.1657-1.1666.

On October 29, we highlight the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1604-1.1615, 1.1657-1.1666, 1.1750-1.1760, 1.1846-1.1857, 1.1922, 1.1971-1.1988, as well as the Senkou Span B (1.1637) and Kijun-sen (1.1623). The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals. Remember to set a Stop Loss at breakeven if the price moves 15 pips in the right direction. This will protect against potential losses if the signal turns out to be false.

For Wednesday, no significant or interesting events or reports are scheduled in the Eurozone, while in the U.S., the FOMC meeting will take place, likely to provoke strong market reactions. We won't say that there will be no market reaction. There will be, and it is likely to be strong, but unpredictable.

Trading Recommendations:

On Wednesday, traders can trade from any area or Ichimoku indicator line of their choosing. However, we advise waiting for the price to exit the 1.1604-1.1666 range, as it contains too many levels and lines. It is also important to remember the very low volatility.

Explanations for the Illustrations:

• Price Support and Resistance Levels: Thick red lines that indicate where movement may conclude. These lines do not serve as sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extreme Levels: Thin red lines from which the price has previously bounced. These lines serve as sources of trading signals.
• Yellow Lines: Trend lines, trend channels, and other technical patterns.
• Indicator 1 on COT Charts: The size of the net position for each category of traders.