EUR/USD 5-Minute Analysis

The EUR/USD pair on Wednesday continued trading within the same flat range as in the previous days. Volatility is shrinking day by day, so now the working range is limited by the levels of 1.1615 and 1.1666. Of course, the flat will end sooner or later, but we caution traders against making hasty conclusions. For example, the price has now broken below the ascending trendline, and many traders could have concluded that a downtrend has begun. However, signals within a flat are unreliable. The Ichimoku indicator lines are weakening considerably, so no trading signals should be sought around them either.

One could hope for macroeconomic data, but none has been released this week. Yesterday, the only report of the day was the revised European inflation data for July, which fully matched the first estimate and forecasts. Naturally, the market showed no reaction. Thus, at this time, there are no technical cues, no news, no reports—nothing.

There are no trading signals on the 5-minute timeframe either. From time to time, the price tests a particular line or level, but signals within a flat are more a coincidence than a consistent pattern. Yesterday, the price bounced twice from the Senkou Span B line and once from the 1.1660–1.1666 area. All three signals could have been traded and even yielded small profits. But we believe trading such signals makes little sense. What profit can you expect? Ten pips?

COT Report

The latest COT report is dated August 12. The chart above shows clearly that the net position of non-commercial traders has long been bullish, while the bears only briefly gained an advantage at the end of 2024 before quickly losing it. Since Trump took office as U.S. president, only the dollar has been falling. We cannot say with 100% certainty that the decline of the American currency will continue, but the current global developments suggest exactly that scenario.

We still see no fundamental factors supporting the strengthening of the European currency, but there remains one very weighty factor for the decline of the U.S. dollar. The global downtrend is still intact, but what significance does it have now where the price moved over the past 17 years? Once Trump ends his trade wars, the dollar may begin to rise, but recent events show that the war will continue in one form or another.

The positioning of the red and blue indicator lines continues to signal the preservation of a bullish trend. During the last reporting week, the number of longs in the "non-commercial" group decreased by 1,000, while shorts decreased by 500. Accordingly, the net position declined by 500 contracts over the week, which is a negligible change.

EUR/USD 1-Hour Analysis

On the hourly timeframe, the EUR/USD pair has been flat for several days in a row. The last upward swing began after the price bounced from the Senkou Span B line on the daily timeframe. Thus, the dollar corrected very technically, while the upward trend remained intact. At present, the market is resting, clearly awaiting important events.

For August 21, 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 may shift during the day, which should be considered when determining trading signals. Do not forget to place a Stop Loss at breakeven if the price moves 15 pips in the right direction. This will protect against possible losses if the signal turns out to be false.

On Thursday, the first more or less significant reports of the week will finally be published. Germany, the Eurozone, and the U.S. will release August business activity indices for the services and manufacturing sectors. The U.S. indices are of little interest since the U.S. has its own ISM indices. But the European data will be worth watching.

Trading Recommendations

On Thursday, the market may wake up, as this will be the first day of the week with a macroeconomic background. It will be important to determine during the European session whether the flat has ended. Over the past week, the dollar has failed to strengthen even as part of a correction. Therefore, as before, we expect the pair to rise.

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.