EUR/USD 5-Minute Analysis
The EUR/USD currency pair continued its downward movement on Tuesday, although during the day, it made the first attempts to halt the decline and recover. Overall, we fully supported the euro's decline on Monday and anticipated it would continue on Tuesday. However, it's important to understand that the global fundamental backdrop, which had been pushing the dollar into decline for six months, cannot suddenly reverse overnight. Yes, Donald Trump signed a deal that once seemed unimaginable, but the fact remains that the trade war hasn't gone anywhere. Tariffs will still have a negative impact on both the U.S. and European economies, even if U.S. budget revenues rise.
This is why we believe the dollar has strengthened legitimately and may continue to grow, especially since the weakness of the current correction is visible on the daily timeframe. Still, we do not believe that the overall trend has turned bearish or that the dollar can keep rising for one, two, or three more months without fresh news support.
On the 5-minute chart, two trading signals were generated yesterday. During the European session, the price bounced very precisely from the 1.1534 level and then moved upward by about 40 pips. Unfortunately, just a few hours later, the price returned to 1.1534 and consolidated below it. This was a false sell signal, as the price soon returned above this level. Thus, Tuesday's signals were not the most successful, though they didn't lead to major losses either.
COT Report
The latest COT (Commitment of Traders) report is dated July 22. As shown in the chart above, the net position of non-commercial traders was bullish for a long time. Bears barely took control at the end of 2024, but quickly lost it. Since Trump took office as President of the U.S., the dollar has only declined. While we can't say with 100% certainty that this decline will continue, current global developments suggest this scenario is likely.
We still see no fundamental factors supporting the euro, but one strong factor remains weighing on the U.S. dollar. The global downtrend remains intact, but what does it matter where the price has moved over the last 16 years? Once Trump ends his trade wars, the dollar may begin to rise — but when will that happen?
The position of the red and blue lines in the indicator continues to show a bullish trend. During the last reporting week, long positions held by the "Non-commercial" group increased by 6,200, while shorts increased by 8,900. Therefore, the net position decreased by 1,700 contracts — a negligible change.
EUR/USD 1-Hour Analysis
On the hourly timeframe, the EUR/USD pair has sharply declined and continues to fall. What's now interesting is how long the market will react to the failure of the European negotiating team. Indeed, the deal between Trump and the EU is a serious blow to the euro, but this event alone isn't enough to justify a full return to early 2025 levels. Moreover, given that tariffs remain in place for all countries that signed trade deals with the U.S., we do not consider the trade war over.
For July 30, we highlight the following trading levels: 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 line (1.1659) and the Kijun-sen line (1.1654). Ichimoku indicator lines may shift throughout the day, which must be considered when identifying trading signals. Don't forget to set your Stop Loss to breakeven once the price moves 15 pips in the correct direction. This helps protect against losses if the signal turns out to be false.
On Wednesday, GDP reports for Germany and the EU are scheduled for release. In the U.S., Q2 GDP data and the ADP labor market report will be published. In the evening, the FOMC meeting results will be announced, followed by a press conference with Jerome Powell.
Trading Recommendations
On Wednesday, a new storm in the market is quite possible. Throughout the day, the direction of the pair may change several times, as there will be plenty of important events. We believe the market has already priced in the U.S.–EU trade deal and will now shift its focus to the FOMC meeting and the U.S. labor market, unemployment, and business activity data.
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.
