23.10.202610:41 Forex Analysis & Reviews: EUR/USD – October 23: Markets Await Business Activity Data

The EUR/USD pair continued to trade sideways on Wednesday. As of Friday morning, the pair's quotes remain below the 127.2% retracement level at 1.1220, suggesting the possibility of a further decline toward the 161.8% Fibonacci level at 1.1086. Consolidation above 1.1220 would favor the euro and a potential rise toward the 100.0% retracement level at 1.1325.

The wave structure on the hourly chart remains bearish. The latest completed downward wave broke below the previous low, while the new upward wave has not yet broken above the previous high. Following the September FOMC meeting, traders expect at least one more monetary policy tightening before the end of the year and another next year. This factor continues to provide strong support for the US dollar, while other factors have yet to become relevant. The bears have gained momentum, which is also helping the dollar strengthen.

There was no significant fundamental news on Thursday. One report was released in the United States—the initial jobless claims report—but it attracted little interest from traders. The intraday appreciation of the US dollar was not driven by this report. Thus, there was virtually no news affecting the dollar or the euro this week. Only later today, in a couple of hours, will the services and manufacturing business activity indices for Germany and the European Union be released, followed by the corresponding US data in the second half of the day. These reports are the only opportunity to see any meaningful market movement. EUR/USD has been trading sideways for four days, and traders are reluctant to take risks ahead of two central bank meetings. The monetary policy decisions scheduled for next week are effectively already known: both central banks are expected to leave interest rates unchanged. Nevertheless, traders want to wait for the central bank chiefs' speeches to understand what additional measures policymakers may be prepared to take to bring inflation down.

On the 4-hour chart, after forming a fifth bullish divergence, the pair reversed in favor of the euro once again and rose toward the 127.2% Fibonacci level at 1.1221. Consolidation above this level would open the way for a rise toward 1.1325. Consolidation below 1.1221 would favor the US dollar and a resumption of the decline toward the 161.8% retracement level at 1.1088. No emerging divergences are currently visible.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 20,091 Long positions and opened 18,150 Short positions. Speculators currently hold a total of 223,000 Long positions and 360,000 Short positions. The bears remain in control, and the euro continues to be sold more often than it is bought. This is attributed to the difficult geopolitical situation in the Middle East and Kevin Warsh's intention to bring inflation down. The market still believes that inflation will be reduced to 2% by any available means.

Overall, large market participants continue to show considerable interest in the euro over the longer term. Events of various kinds around the world—which have been abundant in recent years—affect investor sentiment and put pressure on risk-sensitive currencies. Moreover, 2026 could set a record for the number of events that could not have been anticipated in advance. Traders therefore have little choice but to adapt to the changing reality as events unfold.

Economic Calendar for the United States and the European Union:

• Germany – Services Purchasing Managers' Index (07:30 UTC).
• Germany – Manufacturing Purchasing Managers' Index (07:30 UTC).
• European Union – Services Purchasing Managers' Index (08:00 UTC).
• European Union – Manufacturing Purchasing Managers' Index (08:00 UTC).
• United States – Services Purchasing Managers' Index (13:45 UTC).
• United States – Manufacturing Purchasing Managers' Index (13:45 UTC).

On October 23, the economic calendar contains six entries, but traders have managed quite well without economic data in recent days. The impact of economic releases on market sentiment may be limited on Friday.

EUR/USD Forecast and Trading Recommendations:

Buying opportunities may arise if the pair rebounds from 1.1220 on the hourly chart, with a target of 1.1325. Selling opportunities may arise if the hourly chart closes below 1.1220, with the 1.1081–1.1086 support level as the target. The 1.1220 level has not performed particularly well in recent days, as the signals generated around it have been false.

The Fibonacci levels are drawn from 1.1325 to 1.1712 on both the hourly and 4-hour charts.