EUR/USD 5-Minute Analysis

On Friday, the EUR/USD pair rose for most of the day but ended up falling. With limited news from the Eurozone in the morning, the market anticipated weak US labor and unemployment data. These expectations were only partially met: unemployment increased, but nonfarm payrolls exceeded forecasts for both November and October. Consequently, the most pessimistic expectations were not realized, and the dollar quickly regained its unjustly lost ground.

The US reports once again demonstrated no significant issues in the US economy. While unemployment has steadily risen, even Federal Reserve officials have repeatedly stated that this level is acceptable. The Fed has aimed to cool the US labor market to slow inflation, and the robust job creation figures highlight the strength of the American economy. This also suggests that the Fed will continue reducing rates cautiously.

Unfortunately, Friday's market movement was such that trading opportunities were scarce. Even during the European session, it became clear that there would be no reliable signals. The 1.0581 level was ignored throughout the day, and no other signals were generated. During the US session, with the release of key US data, the market became even more unpredictable, making trades riskier.

COT Report

The latest Commitment of Traders (COT) report is dated December 3. As shown in the chart, the net position of non-commercial traders remains "bullish," though bears are gradually gaining ground. About six weeks ago, professional traders significantly increased their short positions, turning the net position negative for the first time in a long while. This indicates that the euro is now being sold more frequently than bought.

Fundamentally, there are no clear reasons for euro appreciation. Technically, the pair remains in a consolidation zone or a flat trend. On the weekly chart, EUR/USD has been trading between 1.0448 and 1.1274 since December 2022, making further declines more likely. A breakout below 1.0448 could open new downside potential for the euro.

The red and blue lines have crossed, signaling a bearish market trend. During the latest reporting week, the number of long positions among the "non-commercial" group increased by 11,400, while short positions rose by 12,800. As a result, the net position decreased by 1,400.

EUR/USD 1-Hour Analysis

On the hourly chart, the pair continues to correct. The correction remains slow and complex, as anticipated. We still see no justification for a strong rally in the euro, so we expect the correction to conclude and the pair to resume its decline toward parity. A break below the Senkou Span B line could signal a potential resumption of the downtrend.

On December 9, we highlight the following levels for trading - 1.0269, 1.0340-1.0366, 1.0485, 1.0585, 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, as well as the Senkou Span B (1.0464) and Kijun-sen (1.0545) lines. The Ichimoku lines may shift throughout the day, so they should be monitored closely when identifying trading signals. Always set a Stop Loss at breakeven if the price moves 15 pips in the desired direction to safeguard against potential losses in case of a false signal.

No significant events are scheduled in the US or Eurozone on Monday, and the overall economic calendar for the week is relatively light. As a result, the pair's behavior is unlikely to change dramatically today, and volatility is expected to remain low.

Illustration Explanations:

• Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.
• Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.
• Yellow Lines: Trendlines, channels, or other technical patterns.
• Indicator 1 on COT Charts: Reflects the net position size of each trader category.