EUR/USD 5-Minute Analysis

The EUR/USD currency pair showed no movement on Monday. There were hopes that, following last week's intense fundamental and macroeconomic backdrop—especially Friday's—the market would remain active on Monday. However, those expectations were not met. The pair traded strictly sideways throughout the day, with minimal volatility.

In principle, Monday changes nothing in our outlook or the overall market landscape. We still do not see any basis for the dollar to show medium-term growth. After the disappointing Nonfarm Payrolls and unemployment data—which significantly increased the likelihood of Federal Reserve rate cuts at each meeting through year-end—and against the backdrop of the firing of the head of the Bureau of Labor Statistics and the strange resignation of Fed member Adriana Kugler, we believe the dollar simply has no other option but to decline. Additionally, Donald Trump continues to impose and raise tariffs and threatens half the world that refuses to "dance to his tune." From our perspective, the trade war has not de-escalated at all recently.

From a technical standpoint, we assume that the downward trend on the hourly timeframe has ended, although there is no trend line or channel present. On the 5-minute timeframe, no trading signals were formed. This is a good thing, since price action was sideways and low in volatility.

COT Report

The latest COT report is dated July 29. In the illustration above, it is visible that the net position of non-commercial traders had long been "bullish"; the bears barely took the upper hand at the end of 2024 but quickly lost it again. Since Trump assumed the presidency, the dollar has been the only currency to fall. We cannot say with 100% certainty that the U.S. dollar will continue to decline, but current global developments suggest that scenario.

We still do not see any fundamental factors supporting the euro's strength. However, there remains one very significant factor pushing the U.S. dollar down. The global downtrend persists — but what does it matter where the price has been moving over the past 16 years? Once Trump ends his trade wars, the dollar might start rising, but the latest trade deals have shown that the conflict will continue in one form or another.

The red and blue lines of the indicator continue to show a bullish trend. During the last reporting week, long positions among the "non-commercial" group increased by 400, while short positions rose by 2,600. Consequently, the net position decreased by 2,200 contracts, which represents a minor change.

EUR/USD 1-Hour Analysis

On the hourly timeframe, EUR/USD has sharply begun to rise, which could mark the early phase of a new uptrend. At the very least, the price is currently above the critical line, and on the daily timeframe, it has bounced off the Senkou Span B line. Therefore, there are far more reasons to expect continued upward movement—technically and fundamentally—than a new decline.

For August 5, we highlight the following levels for trading: 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1615, 1.1666, 1.1750–1.1760, and 1.1846–1.1857, as well as the Senkou Span B line (1.1654) and the Kijun-sen line (1.1494). The Ichimoku indicator lines may shift throughout the day, so this should be taken into account when identifying signals. Don't forget to set Stop Loss at breakeven if the price moves 15 pips in the desired direction—this will protect you from potential losses in case of a false signal.

On Tuesday, service sector PMI data for July is scheduled for release in Germany, the Eurozone, and the U.S. However, aside from the U.S. ISM index, all PMIs will be second estimates and carry little weight. The ISM index deserves the most attention, as it could trigger a strong market reaction.

Trading Recommendations

On Tuesday, price growth may continue—at the very least due to the bounce off the Senkou Span B line (daily TF) and the 1.1534 level on Friday. The price may continue moving toward the Senkou Span B line on the 4-hour timeframe. Therefore, we remain in long positions. For now, short positions are not being considered.

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.