EUR/USD 5-Minute Analysis

On Friday, the EUR/USD currency pair continued its upward movement, which began on Wednesday evening. Market volatility in recent weeks has been low, and the hourly chart clearly shows a mostly sideways character of price action. Despite a rich macroeconomic background on the last trading day of the week, the market hardly reacted. Of all the reports released, traders only really responded to the University of Michigan Consumer Sentiment Index, which came out last. The index declined further to 58.2, which triggered dollar selling. As we can see, even macroeconomic data do not always support the dollar.

Thus, the current situation for EUR/USD remains unchanged. The fundamental backdrop for the US currency continues to be negative. On all timeframes, the technical picture more or less signals an uptrend. On Friday it was also revealed that inflation in Germany accelerated slightly more than expected, to 2.2% year-on-year. This value does not guarantee a rise in overall eurozone inflation. The main thing is that the latest uptick in EU inflation does not become a trend. Otherwise, the European Central Bank may officially end its monetary easing cycle, which would be another bullish factor for the euro.

Among Friday's trading signals on the 5M timeframe, there were two bounces from the support area at 1.1660–1.1666. In the first case, the pair moved up about 20 pips, in the second—a little more. It was fairly difficult to profit from these signals, but you could have closed the second trade with a 20–25 pip gain. Considering the current weak market, that's not bad.

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, EUR/USD has taken the first step towards forming a new uptrend; however, this is only the initial step so far. The global factors driving dollar weakness—which we've discussed repeatedly—haven't disappeared. We still do not see any grounds for a mid-term dollar rally, and now, technically, nearly all timeframes are showing upward trends.

For September 1, we highlight the following trading levels: 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 Senkou Span B (1.1660) and Kijun-sen (1.1663) from the Ichimoku indicator. The Ichimoku lines can fluctuate throughout the day, which should be taken into account when determining trading signals. Don't forget to set your Stop Loss to breakeven if the price moves 15 pips in the right direction. This will protect against potential losses if the signal proves to be false.

On Monday, the most important event will be Christine Lagarde's speech. All other macroeconomic releases are absolutely secondary. It's unlikely that Lagarde will announce anything new about monetary policy. It would only make sense to expect this after the EU inflation report is published.

Trading Recommendations

The upward move may continue on Friday, as the price broke above the Ichimoku indicator lines and bounced back from them twice. Therefore, further growth towards the 1.1750–1.1760 zone is expected.

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.