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On Wednesday, the EUR/USD pair fell close to the 261.8% corrective level at 1.0662. This movement can be described as impulsive. Currently, the pair's quotes are recovering toward the resistance zone of 1.0781–1.0797, near which a reversal in favor of the U.S. dollar can be expected. However, today's news flow will once again be strong, so the euro's potential growth by the end of the day cannot be ruled out.
The wave pattern is clear and raises no doubts. The last upward wave failed to surpass the previous high, while the new downward wave easily broke through the previous low. Thus, the pair continues to form a "bearish" trend, and the corrective wave formation appears complete. Bulls have lost their market initiative entirely. Regaining control will require significant effort, which they are unlikely to achieve in the near future.
Wednesday's news supported the bears. While Donald Trump's election victory and the Republican control of Congress may not seem sufficient reasons for the dollar's strong growth, traders found them significant. Regardless, the dollar has strengthened, but this growth should be approached with caution. Pinpointing the exact reasons for the dollar's rise is difficult. Will Donald Trump's policies unequivocally benefit the U.S. economy? As his first term showed, this is not guaranteed. However, the Republicans' control of Congress likely explains the market's strong reaction.
This evening, the Fed will meet, revealing its plans for future sessions and its response to the U.S. labor market slowdown. The anticipated 0.25% rate cut has been priced in, but Jerome Powell's statements during the press conference will carry more weight.
On the 4-hour chart, the pair reversed in favor of the U.S. dollar and consolidated below the 76.4% corrective level at 1.0747, suggesting further declines toward the 100.0% corrective level at 1.0603. Currently, no divergences are visible on any indicators. A consolidation above 1.0747 could indicate growth toward 1.0836. Movements remain volatile, reflecting market nerves.
Commitments of Traders (COT)
Last week, speculators opened 6,154 long positions and 27,934 short positions. The "Non-commercial" group's sentiment has shifted to bearish. Speculators now hold 159,000 long positions and 209,000 short positions.
For the eighth consecutive week, major players have reduced their euro holdings. This likely signals the start of a new "bearish" trend or at least a significant global correction. The primary factor for the dollar's earlier decline—expectations of FOMC monetary policy easing—has already been priced into the market, leaving no major reasons for widespread dollar selling. While new factors may emerge, dollar growth remains more probable. Technical analysis also points to the beginning of a "bearish" trend, indicating a prolonged decline in the EUR/USD pair.
Economic Calendar for the U.S. and Eurozone:
On November 7, the economic calendar includes the Fed meeting and several other noteworthy events. The news background could strongly influence market sentiment.
Forecast for EUR/USD and Trading Recommendations:
This week, traders should exercise extreme caution due to high volatility and unpredictable movements from the U.S. elections and the Fed meeting. Selling opportunities may arise if quotes rebound from the 1.0781–1.0797 zone on the hourly chart.
Fibonacci grids are plotted at 1.1003–1.1214 on the hourly chart and at 1.0603–1.1214 on the 4-hour chart.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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