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The EUR/USD pair continued to rise on Thursday and consolidated above the 100.0% retracement level at 1.1620. Thus, the euro's rise may continue today toward the next Fibonacci level of 127.2% at 1.1700. Consolidation below the 1.1620 level would favor the U.S. dollar and a resumption of the decline toward the 76.4% retracement level at 1.1551.
The wave structure on the hourly chart remains bullish despite the two-week decline. The latest completed upward wave broke the previous peak, while the latest downward wave did not break the previous low. Geopolitical developments remain consistently negative: negotiations between Iran and the United States are not taking place, and the blockade of the Strait of Hormuz remains in place. However, the FOMC's stance, which remains highly contradictory, is currently more important for the dollar.
The fundamental background on Thursday allowed the bears to continue their attacks, but they unexpectedly retreated. The bears' retreat may have been related to today's U.S. labor market and unemployment reports, as many traders are expecting weak figures. Thus, the market may have started preparing for the Nonfarm Payrolls and unemployment rate in advance. I am not sure that these two reports will prove disastrous for the dollar, but in any case, they will not affect the overall picture. The official U.S. unemployment rate remains at a fairly low level, so a sharp deterioration or improvement in the situation should not be expected. Nonfarm Payrolls are a different matter: the figure has been declining for almost six months, while the latest annual revision resulted in an even larger reduction in the number of jobs created. Thus, even a figure above traders' expectations will not repair the dire situation in 2026. I still believe that the FOMC will not tighten monetary policy in September due to the weakness of the labor market. However, the bears may resume their attacks today if Nonfarm Payrolls surprise traders positively for the first time in a long while.
On the 4-hour chart, the pair continues to decline and has consolidated below the upward trend channel. A new rebound from the 50.0% Fibonacci level at 1.1588 has allowed for expectations of a small rise in the euro. Consolidation above the 1.1649 level would allow traders to expect further growth toward the 76.4% retracement level at 1.1726. No emerging divergences are currently observed on any of the indicators.
Commitments of Traders (COT) Report:
During the latest reporting week, professional traders opened 2,678 Long positions and closed 20,058 Short positions. Over the seven weeks in February and March, the bulls' overwhelming advantage evaporated because of the war in Iran, while over the past twenty-two weeks, the situation has become more balanced amid the apparent ceasefire and the market's hopes for an end to the war. The total number of Long positions held by speculators currently stands at 198,000, while the number of Short positions stands at 235,000. The bears remain in the lead, but their advantage is shrinking rapidly.
Overall, over the long term, large market participants continue to show greater interest in the euro. Of course, events of various kinds around the world, which have been plentiful in recent years, influence investor sentiment. In particular, the market is currently keeping a close eye on the situation in the Middle East, where the war alternately appears to end and then resume. However, geopolitics no longer determines the dollar's fate on its own.
News calendar for the United States and the European Union:
On September 4, the economic events calendar contains four entries, among which I cannot fail to highlight Nonfarm Payrolls and the unemployment rate, the two most important indicators. The economic background may have a strong influence on market sentiment on Friday during the second half of the day.
EUR/USD forecast and trading tips:
Buying the pair was possible on a close above the 1.1620 level on the hourly chart, with a target of 1.1700. These trades can be kept open today, taking the U.S. reports into account. Selling is possible on consolidation below the 1.1620 level on the hourly chart, with a target of 1.1551.
The Fibonacci level grids are drawn from 1.1620–1.1325 on the hourly chart and from 1.1849–1.1325 on the 4-hour chart.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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