FX.co ★ Crude | EUR/USD

The EUR/USD pair resumed its downward trend, lacking any clear domestic catalysts to drive its short-term movement, with the main downtrend line remaining intact. Most market participants did not question the fundamental reasons for the continued strength of the US dollar. Although the Federal Reserve meeting minutes were released later in the evening, the market had already capped the recent rally, making any further dollar strengthening unlikely. Analysts often attribute the euro's weakness to external headwinds, such as the French budget crisis, but this explanation seems far-fetched given the broader sovereign debt challenges facing both sides of the Atlantic, rising bond yields, and sharp monetary adjustments. Objectively, the macroeconomic fundamentals of the euro and the dollar are largely aligned, yet the euro has faced persistent selling pressure for almost five consecutive weeks. Technically, the continued decline in the EUR/USD pair remains fully justified, as the price continues to trade steadily below the Ichimoku indicator and maintains a key structural support level. During the European trading session, the price action on the five-minute chart showed a strong sell signal, closing below the 1.1221 support level. This confirms the continuation of the bearish momentum that began near the 1.1266-1.1274 area. Looking at institutional positions more broadly through the latest Commitments of Traders (COT) report, net non-commercial positions remain in short territory, with a significant contraction expected in 2026 amid ongoing geopolitical shocks. Over the past six months, driven by increased safe-haven demand due to conflicts in the Middle East and the Federal Reserve's unexpected shift towards a tighter monetary policy, market participants have systematically sold the euro and bought the dollar. During the reporting period, speculative long positions in the non-commercial sector increased by 17,500 contracts. However, this increase was offset by a significant rise in short positions of 28,400 contracts, resulting in a net decrease of 10,900 contracts and revealing a fragile balance where dollar sellers maintain a slight tactical advantage. Looking ahead, the structural outlook suggests that while the overall macroeconomic uptrend remains technically intact, the EUR/USD exchange rate could eventually decline to the key trendline support level around $1.08. Nevertheless, current market sentiment remains short-sighted, focusing solely on pro-dollar factors and completely ignoring contradictory economic data. On the daily chart, the EUR/USD exchange rate continues to form a strong descending channel, with the continued strength of the dollar depending more on overall market sentiment than on any recent policy statements. Despite the European Central Bank raising interest rates twice earlier this year and mixed US economic data pointing to a slowdown, the market currently sees few domestic catalysts to support a positive outlook for the euro. Key technical levels for the current trading session include support and resistance levels at 1.1092, 1.1147, 1.1221, 1.1274, 1.1362-1.1368, 1.1461-1.1473, 1.1536-1.1542, 1.1585, and 1.1657-1.1665, as well as dynamic Ichimoku cloud indicators, such as the main B line at 1.1347 and the baseline at 1.1222. Because these structural indicators change dynamically throughout the trading day, active traders should constantly adjust their charts to assess new entry signals. Furthermore, careful risk management remains crucial. For example, once the price moves safely 15 basis points in the expected direction, stop-loss orders should be immediately adjusted to breakeven to prevent unexpected false breakouts. With no major economic data releases from the Eurozone and low initial jobless claims in the US, Thursday's trading session is expected to lack fundamental catalysts, with price fluctuations driven primarily by technical factors, and short-term volatility likely to be relatively moderate.