FX.co ★ Trading Recommendations and Trade Breakdown for EUR/USD on August 26. Correction Monday

EUR/USD 5-Minute Analysis

On Monday, the EUR/USD currency pair underwent only a minimal correction, with very low volatility. This is not surprising, and we had warned about it. There were no significant events scheduled for Monday, and the German business climate index, even at best, could not attract traders' interest. As a result, we saw a purely technical correction, but the market trend had already shifted upward on Friday.

Let us recall that on that day Jerome Powell delivered his final speech at the Jackson Hole Symposium as Fed Chair, and in our view, his speech was not "dovish." Perhaps there were some dovish undertones, but nothing more. Nevertheless, the market interpreted Powell's remarks as a promise to cut the key rate at the next meeting, and the U.S. dollar once again collapsed. From our perspective, the dollar would continue to fall with or without Powell's "help." The overall fundamental backdrop remains sharply negative for the U.S. currency. Therefore, whether aided by Powell or not, the outlook for the dollar in the coming years is predetermined.

On the 5-minute TF yesterday, not a single trading signal was generated, and price movement was practically absent. We consider the lack of signals a positive outcome for days like yesterday. A rebound from the Ichimoku indicator lines could trigger a resumption of upward movement. Consolidation below these lines, however, would cast doubt on further growth this week.

COT Report

The latest COT report is dated August 19. The chart above clearly shows that the net position of non-commercial traders had long been bullish, while bears only briefly gained dominance at the end of 2024 before quickly losing it again. Since Donald Trump assumed the U.S. presidency, the dollar has been the only currency in decline. We cannot say with 100% certainty that this will continue, but current global developments strongly point in that direction.

We still see no fundamental factors supporting the euro's rise, but there remain plenty of factors weighing on the dollar. The global downtrend in the U.S. currency continues, and what does it matter now where the price moved in the past 17 years? Once Trump ends his trade wars, the dollar may rise again, but recent events show the wars will persist in one form or another.

The positions of the red and blue lines on the indicator continue to signal a bullish trend. During the last reporting week, long positions among the "Non-commercial" group increased by 6,400, while shorts rose by 3,100. As a result, the net position rose by 3,400, a minor change.

EUR/USD 1-Hour Analysis

On the hourly timeframe, the EUR/USD pair has taken its first step toward forming a new upward trend. The global factors driving the U.S. dollar's decline, which we have been highlighting repeatedly, came into play during Powell's speech on Friday. We still see no grounds for a medium-term rise in the dollar, and now, from a technical perspective, trends across nearly all timeframes remain bullish.

For August 26, 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 (1.1630) and the Kijun-sen line (1.1660). The Ichimoku indicator lines can shift during the day, which should be considered when identifying trading signals. Remember to set a Stop Loss to breakeven once the price moves 15 pips in the right direction. This will protect against potential losses if the signal turns out to be false.

On Tuesday, the U.S. will release a report on durable goods orders, which could be of interest. Note that what matters is not the report itself but the deviation of the actual reading from the forecast. If the deviation is significant, we will see a strong market reaction. If not, then no.

Trading Recommendations

On Tuesday, upward movement may well resume. Much will depend on the day's only report – U.S. durable goods orders. If the data comes in stronger than expected, the dollar may strengthen below the Ichimoku indicator lines. If weaker than forecast, the pair's growth will resume toward the resistance area of 1.1750–1.1760.

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.