EUR/USD 5-Minute Analysis
The EUR/USD currency pair continued its upward movement on Tuesday, a rally that had resumed the previous Monday evening. Thus, completely ignoring the macroeconomic background, the market continues to sell off the U.S. dollar on a daily basis. Occasionally, it pauses, though these pauses are not necessarily linked to profit-taking on long positions. Such pauses typically end unexpectedly and aren't tied to specific events or reports. And even if they are, how could anyone possibly predict a new tweet from Donald Trump or one of his controversial statements? Should we refresh the news feed or the president's personal account every five minutes?
Tuesday saw several macroeconomic events, but all were rather "bland." The unemployment rate in Germany remained unchanged, the manufacturing PMI in Germany matched forecasts, as did the eurozone's manufacturing PMI, and the eurozone inflation rate also came in line with expectations. Thus, the only news for traders to react to during the day was that related to Trump. This time, Trump decided to deport Elon Musk, who in turn announced the creation of a new political force in the U.S. to oust both Democrats and Republicans. It looks like a new drama series is about to begin.
On the 5-minute chart on Tuesday, two trading signals were generated, though they left much to be desired. First, the pair broke above the 1.1797 level, then attempted to break below it. In neither case did it manage to reach the nearest target level. By the end of the day, we removed this level from the charts. It's worth remembering that, although the current upward movement may look appealing, in reality, it's quite random. It's better to trade it on higher timeframes, where one doesn't have to react to every minor pullback or correction, as this can only confuse traders.
COT Report
The latest COT report is dated June 24. As clearly shown in the illustration above, the net position of non-commercial traders had been "bullish" for a long time. Bears barely gained the upper hand by the end of 2024 but quickly lost that advantage. Since Trump assumed the presidency, only the dollar has been falling. We cannot say with 100% certainty that the decline will continue, but current global developments suggest that it may very well do so.
We still see no fundamental reasons for the euro to strengthen — but there is one strong reason for the dollar to fall. The global downtrend remains in place. But at this point, does it matter where the price moved over the past 16 years? Once Trump ends his trade wars, the dollar might begin to recover — but will Trump ever end them? And when?
Currently, the red and blue lines have crossed again, which means the market trend has once again turned bullish. During the last reporting week, the number of long positions in the non-commercial group increased by 3,000 contracts, while the number of short positions decreased by 6,600. As a result, the net position increased by 9,600 contracts over the week.
EUR/USD 1-Hour Analysis
On the hourly timeframe, the EUR/USD pair continues to form a new upward trend, and the movement remains virtually without pullbacks. A steady stream of news from the U.S. continues to pour in, prompting traders to sell the dollar. This news touches on the economy, politics, immigration, and social support issues—essentially, it's about the future of the United States. And the market continues to reflect its sentiment toward these developments through its actions.
For July 2, the key trading levels are: 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1615, 1.1666, 1.1750, 1.1846–1.1857, as well as the Senkou Span B (1.1596) and Kijun-sen (1.1710) lines. The Ichimoku indicator lines can shift during the day, so this should be taken into account when determining trading signals. Don't forget to set a Stop Loss to breakeven if the price moves 15 pips in the right direction—this will protect against potential losses if the signal turns out to be false.
On Wednesday, notable events include another speech by Christine Lagarde, who now speaks almost daily, as well as the ADP report on employment changes in the U.S. private sector. Also, keep in mind the ongoing conflict between Trump and Musk, as well as the approaching July 9 deadline.
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.
