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04.09.2024 12:40 PM
EUR/USD. September 4. U.S. Economy Faces Challenges Again

On Tuesday, the EUR/USD pair once again rebounded from the 161.8% corrective level at 1.1070, leading to a reversal in favor of the U.S. dollar. Currently, the pair is heading towards the 1.1070 level again. A third rebound from the 1.1070–1.1081 zone could signal a continued decline towards the 127.2% Fibonacci level at 1.0984. If the pair consolidates above the 1.1070–1.1081 zone, we could see some growth towards the 200.0% corrective level at 1.1165.

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The wave structure has become a bit more complex, but it remains generally clear. The last completed upward wave broke the peak of the previous wave, while the new downward wave hasn't yet approached the last low from August 15. Thus, the current trend remains bullish. For this trend to reverse, bears would now need to break the low of the most recent downward wave, which is near the 1.0950 level.

Tuesday's news once again brought no significant support for the U.S. dollar. The ISM Manufacturing Index performed better than last month, but the S&P Manufacturing Index showed a decline from 49.6 to 47.9. As a result, Tuesday's news cannot be considered a positive for the dollar. Throughout the day, bears made several attempts to apply pressure on the pair, but these efforts were weak and lacked conviction. As I mentioned earlier, this week's developments will heavily depend on the news flow. So far, there has been little news, and it has allowed the dollar to maintain its recently gained positions. However, the first weak report could trigger a revival of the bulls. Today, the JOLTS report might be that trigger. If the number of job openings falls below expectations, we may see consolidation above the 1.1070–1.1081 zone. The market still expects aggressive rate cuts from the Federal Reserve by the end of the year, which remains a key risk factor for the U.S. dollar.

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On the 4-hour chart, the pair has consolidated below the 100.0% Fibonacci level at 1.1139. This suggests a potential decline in the euro towards the 76.4% corrective level at 1.1013. A rebound from the 1.1013 level could signal a reversal in favor of the euro and some growth towards 1.1139. Currently, no divergences are observed in any indicators.

Commitments of Traders (COT) Report:

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In the latest reporting week, speculators opened 24,031 long positions and closed 12,790 short positions. The sentiment of the "Non-commercial" group turned bearish several months ago, but bulls are actively dominating at the moment. The total number of long positions held by speculators is now 218,000, while the number of short positions is 125,000.

I still believe the situation will continue to shift in favor of the bears. I see no long-term reasons to buy the euro. It's also worth noting that the market has already priced in a 100% chance of a rate cut by the FOMC in September. The likelihood of a euro decline remains significant. However, we must not forget about technical analysis, which currently doesn't indicate a sharp euro decline, nor the news background, which regularly throws obstacles in the dollar's path.

U.S. and Eurozone News Calendar:

  • Eurozone – German Services PMI (07:55 UTC)
  • Eurozone – Services PMI (08:00 UTC)
  • U.S. – JOLTS Job Openings (14:00 UTC)

The September 4 economic calendar contains three key events. The news impact on market sentiment in the second half of the day could be moderate.

Forecast for EUR/USD and Trader Recommendations:

Selling the pair could be considered after a rebound from the 1.1070–1.1081 zone, targeting 1.0984. These trades can still be held open. Buying will be possible if the pair closes above the 1.1070–1.1081 zone on the hourly chart, targeting 1.1165.

The Fibonacci levels are based on the 1.0917–1.0668 range on the hourly chart and 1.1139–1.0603 on the 4-hour chart.

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