EUR/USD 5-Minute Analysis
The EUR/USD currency pair traded quite expressively on Thursday. For most of the day, we observed a low-volatility sideways movement, and as soon as U.S. labor market and unemployment data were released, the price plummeted. And the drop was not without reason, as the two most important reports of the week came out stronger than forecast. The unemployment rate, against logic and common sense, decreased in June, and the number of NonFarm Payrolls significantly exceeded expectations.
However, the most important aspect wasn't the unemployment or labor market data. The key factor was the traders' reaction. The market instantly dropped by 70 pips (in literally 5 minutes) and then nearly fully recovered within an hour. That was all the strengthening the U.S. dollar managed to achieve. Moreover, while macroeconomic data from overseas were encouraging this week, macro data is no longer the deciding factor for the dollar's fate. We've already mentioned that the deals signed by Donald Trump — and their overall number — can only evoke laughter among traders. Out of 75 countries, only the UK, Vietnam, and China signed agreements with Washington. And even the deal with China raises numerous questions.
Thus, we believe the general fundamental background, which has dragged the dollar into the abyss for 5 months, remains completely unchanged. The strength of the U.S. labor market merely means that the Federal Reserve may leave the key rate unchanged in the near term. But what does the rate even matter to the dollar if it's been falling throughout 2025, while the Fed holds it at 4.5% and the Bank of England and European Central Bank are cutting theirs?
On the 5-minute chart, trading signals only formed after the release of U.S. data. The sell signal in the 1.1750–1.1760 range was hardly worth acting on, for obvious reasons. However, long positions on the opposing signal could have been considered. Still, the price couldn't sustain either a rally or a drop.
COT Report
The latest COT report is dated June 24. As clearly shown in the illustration above, the net position of non-commercial traders had been "bullish" for a long time. Bears barely gained the upper hand by the end of 2024 but quickly lost that advantage. Since Trump assumed the presidency, only the dollar has been falling. We cannot say with 100% certainty that the decline will continue, but current global developments suggest that it may very well do so.
We still see no fundamental reasons for the euro to strengthen — but there is one strong reason for the dollar to fall. The global downtrend remains in place. But at this point, does it matter where the price moved over the past 16 years? Once Trump ends his trade wars, the dollar might begin to recover — but will Trump ever end them? And when?
Currently, the red and blue lines have crossed again, which means the market trend has once again turned bullish. During the last reporting week, the number of long positions in the non-commercial group increased by 3,000 contracts, while the number of short positions decreased by 6,600. As a result, the net position increased by 9,600 contracts over the week.
EUR/USD 1-Hour Analysis
On the hourly timeframe, EUR/USD continues to form an upward trend, and the movement is nearly uninterrupted, visible on almost any chart above 1H. The U.S. continues to pour out news that forces traders to abandon the dollar. This news relates to the economy, politics, migration, and social support. The market is actively reacting to all of it. This week, the dollar received slight support from macroeconomic data, but it didn't significantly impact the bigger picture.
For July 4, 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, 1.1846–1.1857, as well as the Senkou Span B line (1.1596) and Kijun-sen line (1.1760). Ichimoku indicator lines may shift throughout the day, so take that into account when determining trading signals. Don't forget to place the Stop Loss to breakeven if the price moves 15 pips in the correct direction — this will protect you from possible losses in case of false signals.
On Friday, the U.S. will observe Independence Day, so trading in the second half of the day will likely be minimal. In the first half, traders will also have little to react to. ECB President Christine Lagarde will speak publicly again, but there have already been 5 or 6 such appearances in the past two weeks.
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.
