EUR/USD 5-Minute Analysis

The EUR/USD currency pair continued its upward movement on Monday, but in the second half of the day, a decline in the quotes occurred. In general, we cannot conclude that the flat (sideways) market is over. The price again reached the area of the previous local maximum and was unable to continue its movement to the North. Yesterday, the low volatility and low trader interest in the trend were understandable. There were again no major macroeconomic events during the day, and Christine Lagarde's speech yielded no notable insights. Thus, we faced another boring Monday, all within the context of a two-week flat.

However, the market is expected to liven up this week. After all, labor market data, ISM indices, and unemployment figures are not published every day. And these are the indicators that the Federal Reserve will take into account on September 16–17, at a meeting that can already be called a fateful one. Either the Fed will resume monetary policy easing or put off this decision once again. For the dollar, there isn't much difference, but a rate cut is yet another factor contributing to the decline.

On Monday, no trading signals were formed. The last buy signals appeared on Friday, when the pair bounced twice from the 1.1660–1.1666 area. The target area of 1.1750–1.1760 has not yet been reached.

COT Report

The latest COT report is dated August 26. As shown in the chart above, the net position of non-commercial traders remained bullish for a prolonged period; bears briefly gained the upper hand at the end of 2024 but quickly lost it. Since Trump became the US President, the dollar has been the only currency to decline. We can't say with 100% certainty that the US dollar will continue to fall, but current global developments seem to suggest this scenario.

We still see no fundamental factors that would strengthen the euro, while there remain plenty of factors that could lead to further dollar weakness. The global downtrend remains in place, but what does it matter that the price has moved for the last 17 years? As soon as Trump ends his trade wars, the dollar might recover, but recent events show that the war is likely to continue in one form or another. The possible loss of Fed independence is another major pressure factor for the US currency.

The positioning of the red and blue lines on the indicator continues to point to a bullish trend. In the last reporting week, long positions held by the "Non-commercial" group grew by 5,700, while short positions grew by 1,300. Accordingly, the net position increased by 4,400 contracts during the week.

EUR/USD 1-Hour Analysis

On the hourly timeframe, the EUR/USD pair has taken its first step towards forming a new upward trend, but so far, it has only taken a single step. The global factors that we constantly discuss as contributing to the decline of the US currency have not disappeared. We still see no reason for a medium-term dollar rally, and now, technically, the trend is upward on almost all timeframes. The only thing left is to wait for the end of the flat on the hourly TF.

For September 2, we are highlighting the following levels for trading: 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1604–1.1615, 1.1666, 1.1750–1.1760, 1.1846–1.1857, as well as the Senkou Span B (1.1660) and Kijun-sen (1.1663) lines. The lines of the Ichimoku indicator can fluctuate throughout the day, which should be taken into account when identifying trading signals. Don't forget to set a Stop Loss order to break even if the price moves 15 pips in the right direction. This will protect you from potential losses if the signal turns out to be false.

On Tuesday, the most important event of the day will be the US ISM Manufacturing PMI. This report will open up a series of important US data. The EUR/USD pair may break out of the sideways channel today if this report disappoints.

Trading Recommendations

On Tuesday, the upward movement may continue, as the price has overcome the lines of the Ichimoku indicator and bounced off them twice from above on Friday. Thus, we expect further growth towards the 1.1750–1.1760 area.

Illustration Explanations:

• Support and resistance price levels – thick red lines where movement may end. They are not trading signal sources.
• Kijun-sen and Senkou Span B lines—These are strong Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour one.
• Extremum levels – thin red lines where the price has previously rebounded. These act as trading signal sources.
• Yellow lines – trend lines, trend channels, and other technical patterns.
• Indicator 1 on the COT charts – the size of the net position for each category of traders.