EUR/USD 5-Minute Analysis

The EUR/USD currency pair showed only a sluggish and unimpressive upward movement on Friday. Volatility has dropped to nearly zero, and market movements have been largely formal. This lack of activity is not surprising, as there has been little fundamental or macroeconomic news throughout most of the past week. We expect this trend to continue during the early part of the upcoming week. Therefore, significant movements are unlikely in the last days of the old year and the first days of the new year.

The pair bounced again from the 1.0340–1.0366 range, leading to a new upward pullback. However, this pullback is very weak, and the price has yet to consolidate above the Senkou Span B line. Despite the market's holiday-induced lethargy, the downward trend remains intact, even on the hourly timeframe.

We continue to anticipate a decline in the euro, although the market remains stagnant for now. Among Friday's trading signals, the bounce from the Senkou Span B line could have been highlighted, but with daily volatility not exceeding 40 pips, there is no strong reason to open new positions.

COT Report

The latest Commitments of Traders (COT) report, dated December 17, provides important insights. The accompanying chart shows that the net position of non-commercial traders has generally maintained a bullish stance; however, bears have now taken a dominant position. Two months ago, the number of open short positions held by professional traders surged, resulting in a negative net position for the first time in quite a while. This shift indicates that the euro is now being sold more frequently than it is being bought.

Currently, there are no fundamental factors supporting a strengthening of the euro. From a technical perspective, the price is in a consolidation zone, which can be characterized as a flat range. On the weekly timeframe, it is clear that the euro has been trading between 1.0448 and 1.1274 since December 2022. This suggests that a decline is more likely, and a breakthrough below 1.0448 could lead to further downward movement.

The red and blue lines on the chart have crossed and switched positions, indicating a bearish trend in the market. During the last reporting week, the number of long positions in the Non-commercial group decreased by 4,700, while short positions dropped by 14,400. Consequently, the net position increased by nearly 10,000; however, this change does not affect the overall bearish trend.

EUR/USD 1-Hour Analysis

On the hourly timeframe, the pair has completed a three-week correction and has resumed its downward movement. We believe that this decline could continue even during the holiday period, as the Federal Reserve's stance remains notably hawkish. The Fed is expected to lower rates only 1-2 times in 2025, which is significantly more hawkish than what the market has already priced in. We see no strong grounds for a rally in the euro; in fact, the European currency is struggling to move significantly away from the 1.0340–1.0366 range. During the holiday season, a flat market is likely, which aligns with what we are currently observing.

For December 30, the following levels are highlighted for trading: 1.0195, 1.0269, 1.0340–1.0366, 1.0485, 1.0585, 1.0658–1.0669, 1.0757, 1.0797, 1.0843, and 1.0889, as well as the Senkou Span B line at 1.0541 and the Kijun-sen line at 1.0430. The Ichimoku indicator lines may shift throughout the day, so it's essential to consider this when determining trading signals. Additionally, remember to set a Stop Loss order to breakeven if the price moves 15 pips in your favor. This will help protect against potential losses if the signal turns out to be false.

No significant or noteworthy events are scheduled for Monday. We expect volatility to remain very low, with minimal movements anticipated.

Illustration Explanations:

Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.

Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.

Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.

Yellow Lines: Trendlines, channels, or other technical patterns.

Indicator 1 on COT Charts: Reflects the net position size of each trader category.