EUR/USD 5M Analysis

The EUR/USD currency pair showed virtually no decline throughout Friday. As we warned in the previous article, the 1.1666 level is a strong one, and it would be difficult for the U.S. currency to overcome it. Market volatility is currently quite low, which once again points to the weakness of the bears. Simply put, the dollar is correcting purely on technical grounds. No one in the market is eager to buy it for the medium term.

There was no macroeconomic background on Friday, and among fundamental developments, we can only note Donald Trump's announcement of increased tariffs for Canada. Such news no longer causes shock or panic, as the market has long grown accustomed to it. However, one should remember that this remains a negative factor for the U.S. currency. The fact that it is not falling at the moment does not cancel out the possibility of a market reaction to a new round of trade war escalation in the future. The pair may continue correcting for some time, and then begin a new upward movement, which will be a delayed reaction to all the news of the previous week. Identifying the end of the correction will be fairly easy—a breakout above the descending channel.

On Friday, the price traded sideways. Two trading signals were generated during the day. At night, the 1.1666 level was tested again, and the price then rose to the Kijun-sen line, which itself was moving toward the price during the day. Since at the time the European session opened, the price was only a few points away from the entry signal, long positions could be confidently opened. A rebound from the critical line triggered a small decline, and traders could also have opened a short position.

COT Report

The latest COT report is dated July 8. As shown clearly in the illustration above, the net position of non-commercial traders had long remained "bullish." Bears only briefly gained the upper hand at the end of 2024 but quickly lost it. Since Trump took office as U.S. president, only the dollar has been falling. We cannot say with 100% certainty that the U.S. currency will continue to decline, but the current developments in the world suggest just that.

We still see no fundamental drivers for the euro's strengthening, but there remains one strong factor contributing to the dollar's decline. The global downtrend persists, but does it matter where the price moved over the last 16 years? As soon as Trump ends his trade wars, the dollar might begin to rise again—but will Trump end them? And when?

Currently, the red and blue lines have crossed again, so the trend in the market remains bullish. During the last reporting week, the number of long positions in the "Non-commercial" group increased by 16,100, while short positions increased by 3,100. Thus, the net position grew by 13,000 contracts over the week.

EUR/USD 1H Analysis

On the hourly timeframe, the EUR/USD pair maintains a downward trend supported by a descending channel. Thus, the dollar may continue to appreciate in a convulsive fashion for some time, but its fate now seems sealed. Trump continues to announce new tariffs, trade deals are not being signed, and the dollar is showing purely corrective growth. Therefore, we believe that the current fundamental background, just like before, does not support the dollar.

For July 14, we highlight the following levels for trading: 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1615, 1.1666, 1.1750, 1.1846–1.1857, as well as the Senkou Span B line (1.1642) and the Kijun-sen line (1.1715). The Ichimoku indicator lines may move throughout the day, so this must be taken into account when identifying trading signals. Don't forget to set the Stop Loss to breakeven if the price moves 15 points in the right direction. This will protect you from potential losses if the signal turns out to be false.

On Monday, there are no important events or reports scheduled in either the Eurozone or the U.S. We believe there is a high chance of another rebound from the 1.1666 level today, so traders should prepare for a potential reversal. A breakout below 1.1666 should not be viewed as a sell signal, as a strong Senkou Span B line lies just below it.

Explanations for the illustrations:

• Support and resistance price levels – thick red lines near which price movement may stop. These are not sources of trading signals.
• Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour chart. These are strong lines.
• Extreme levels – thin red lines from which the price previously rebounded. These serve as sources of trading signals.
• Yellow lines – trend lines, trend channels, and other technical patterns.
• COT chart indicator 1 – the size of the net position of each trader category.