Analysis of EUR/USD 5M

The EUR/USD currency pair continued its upward movement on Wednesday after another slight pullback to the trendline. Thus, from a technical perspective, everything is absolutely consistent. The pair has already reached the area of 1.1657-1.1666, and there is not much left to reach the target level of 1.1800. Let us remind you that the euro remains within a sideways channel on the daily timeframe, and after a reversal around the lower boundary of this channel, it is aiming for the upper boundary. Yesterday's macroeconomic background also contributed to the strengthening of the euro. Although its rise started much earlier than the American reports, they nonetheless supported it. The key ADP report failed miserably, and the other reports were not particularly significant. The ADP report, in the absence of Non-Farm Payrolls and the unemployment rate, remains the only labor-market report the Fed can rely on. The next meeting is already on December 10. Thus, the likelihood of a new rate cut reached 100% yesterday.

On the hourly timeframe, the upward trend remains, and we can only speak of a possible decline in the pair after the trendline is breached. Movements remain weak, and volatility is low.

On the 5-minute timeframe, the last trading signal was formed late Tuesday evening. It was after the breakout of the area 1.1604-1.1615 that the upward movement resumed, leading to the completion of the area 1.1657-1.1666. However, executing this signal was quite challenging for obvious reasons.

COT Report

The latest COT report was released last week and is dated October 14, meaning it is somewhat outdated. The illustration clearly shows that the net position of non-commercial traders had long been "bullish," with bears struggling to gain a foothold in the zone of superiority towards the end of 2024, only to lose it quickly. Since Trump took office for a second time as U.S. president, only the dollar has been in decline.

We cannot state with 100% certainty that the decline of the American currency will continue, but current global developments suggest this scenario. We still do not see any fundamental factors that would strengthen the European currency, while there are plenty of factors that could lead to a decline in the dollar. The global downward trend remains intact, but it is less relevant to consider where the price has moved over the last 17 years at this point. The dollar may grow if the global fundamental picture changes, but there are currently no signs of that.

The positioning of the red and blue lines in the indicator continues to suggest that the "bullish" trend is preserved. Over the last reporting week, the number of long positions within the "Non-commercial" group decreased by 12,900, while the number of short positions increased by 2,800. Consequently, the net position decreased by 10,100 contracts over the week. However, this data is already outdated and holds little significance.

Analysis of EUR/USD 1H

On the hourly timeframe, the EUR/USD pair continues to form an upward trend, but it is moving up very slowly, almost reluctantly. The price remains within the daily timeframe's sideways channel of 1.1400-1.1830, so a rise in the euro towards 1.1800 can still be anticipated in the near term. The growth of the euro cannot be termed strong, but movements within the flat are always weak and chaotic.

For December 4, we highlight the following trading levels: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 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 line (1.1553) and the Kijun-sen line (1.1616). The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals. Don't forget to set the Stop Loss order to breakeven if the price moves in the correct direction by 15 pips. This will safeguard against potential losses if the signal turns out to be false.

On Thursday, retail sales will be reported in the Eurozone, while in the U.S., only unemployment claims will be announced. These are not the most significant reports, so the market's reaction to them is unlikely to be strong. Moreover, this week, traders have already ignored many more important reports. Most likely, volatility will remain low today, but the upward trend will be maintained.

Trading Recommendations:

On Thursday, traders can operate from the area of 1.1657-1.1666. In the case of consolidation above this area, new long positions can be considered with a target at 1.1750. In the case of a bounce from the area, short positions can be opened with a target in the area of 1.1604-1.1615.

Illustration Explanations:

• Support and Resistance Levels: Thick red lines where price movement may end. These are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines projected onto the hourly timeframe from the 4-hour timeframe. These are strong lines.
• Extreme Levels: Thin red lines where the price previously rebounded. These are sources of trading signals.
• Yellow Lines: Trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT Charts: The size of the net position for each category of traders.