EUR/USD 5-Minute Analysis

The EUR/USD currency pair showed strong growth on Friday and ended up above the Kijun-sen line. Thus, from a technical standpoint, the trend has started to shift upward. At least for now, there is every reason to believe so. Let us also recall that on the daily timeframe, the price bounced off the Senkou Span B line, and there are no longer any fundamental grounds for the dollar's growth after Friday's macroeconomic data.

Therefore, we believe the euro's upward movement will resume. We also believe that all of Trump's trade deals will not have a positive impact on the key macroeconomic indicators of the economy. Yes, budget revenues will increase, but at the same time imports will fall, demand will decline, and inflation and unemployment will rise. The Federal Reserve may very well resume monetary policy easing as early as September, which is another strong bearish factor for the dollar.

In the 5-minute timeframe, two trading signals were formed around the 1.1426 level during the European session on Friday, which could have been traded. However, movements in the first half of the day were very weak, so both signals yielded no profit. During the U.S. session, a new "storm" began. The price surged by 120 pips in just five minutes. The 1.1426 level again formed a buy signal, but there was no opportunity to act on it. A bit later, the price bounced off the critical line, and traders could have tried to use this signal — but was there any point after such a "spike"?

COT Report

The latest COT report is dated July 29. In the illustration above, it is visible that the net position of non-commercial traders had long been "bullish"; the bears barely took the upper hand at the end of 2024 but quickly lost it again. Since Trump assumed the presidency, the dollar has been the only currency to fall. We cannot say with 100% certainty that the U.S. dollar will continue to decline, but current global developments suggest that scenario.

We still do not see any fundamental factors supporting the euro's strength. However, there remains one very significant factor pushing the U.S. dollar down. The global downtrend persists — but what does it matter where the price has been moving over the past 16 years? Once Trump ends his trade wars, the dollar might start rising, but the latest trade deals have shown that the conflict will continue in one form or another.

The red and blue lines of the indicator continue to show a bullish trend. During the last reporting week, long positions among the "non-commercial" group increased by 400, while short positions rose by 2,600. Consequently, the net position decreased by 2,200 contracts, which represents a minor change.

EUR/USD 1-Hour Analysis

In the hourly timeframe, the EUR/USD pair began to rise sharply, which may mark the beginning of a new uptrend. At the very least, the price is currently above the critical line, and on the daily timeframe, it has bounced off the Senkou Span B line. Thus, considering both technical and fundamental factors, there are more reasons to expect continued upward movement.

For August 4, 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, 1.1750–1.1760, 1.1846–1.1857, as well as the Senkou Span B (1.1673) and Kijun-sen (1.1530) lines. The Ichimoku indicator lines may shift during the day, which should be taken into account when identifying trading signals. Do not forget to place a Stop Loss at breakeven if the price moves 15 pips in the correct direction. This protects against potential losses if the signal turns out to be false.

There are no important events scheduled in either the Eurozone or the U.S. on Monday, but the market may continue to sell U.S. dollars. Friday's events were too significant and will have long-term consequences.

Trading Recommendations

On Monday, the pair may continue rising at least based on the bounce from the Kijun-sen line and the 1.1534 level seen on Friday. If the 1.1615 level is broken, the price may continue moving toward the Senkou Span B line, which looks like the most likely target.

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.
• COT Indicator 1 on the charts – the size of the net position for each category of traders.