The EUR/USD pair posted a small gain on Friday, but the three-day rally changes little in the technical picture, even on the hourly timeframe. The trendline has been breached, but the Senkou Span B line has not. Given that the euro fell for a whole month, a modest uptick is not even a genuine correction — it is a retracement. We cannot conclude the downtrend is over, even though the technical picture remains bullish on higher timeframes, fundamentals and macro data support the euro, and the market has already priced in all available dollar-bull factors several times. The US currency is overbought, and the market has ignored many euro-positive events and factors over the past month. Thus, we again expect the pair to rise, but the market has recently been biased toward dollar buying. On Friday, US industrial-production data favored the dollar, but Kevin Warsh's speech overnight did not support the US currency. Warsh did not promise additional tightening in response to stronger inflation, which disappointed dollar bulls. That said, the Federal Reserve chair did not outline the Fed's plans, so it would be wrong to say he was explicitly dovish.
Technically, the downtrend may be complete because the trendline has been broken. The market bought the dollar for five consecutive weeks on any pretext, but every story ends. Now the euro is headed toward the Senkou Span B line. We believe price should clear that line and begin a sustained uptrend.
On Friday, several decent trading signals formed on the 5-minute chart. Early in the morning, price bounced twice from 1.1221, giving traders early long opportunities. A few hours later, price tested Senkou Span B and rebounded from it, offering opportunities for short positions. Later still, the nearest target at 1.1221 was reached.
The latest COT report is dated October 13. The weekly chart shows that non-commercial traders' net position remains bearish and has declined substantially in 2026 due to geopolitical events. Over the past eight months, traders have reduced euro exposure in favor of the US dollar. Donald Trump's policies have not changed, but the dollar has served as a "reserve" currency for a time.
However, we still see no fundamental basis for further long-term strengthening of the US dollar. The war in the Middle East made the dollar temporarily very attractive, and the Fed's monetary stance surprised the dollar for the second time this year. In the long run, the euro could fall to $1.08 (the trendline), but the uptrend will remain relevant. Recently, the market has incorporated only dollar-positive factors and ignored everything else.
The positioning of the red and blue indicator lines points to a bears' advantage. During the last reporting week, long positions in the "Non-commercial" group fell by 20,100, while shorts rose by 18,200. Accordingly, the net non-commercial position decreased by another 38,300 contracts over the week.
On the hourly timeframe, the EUR/USD pair finally has the opportunity to form an uptrend. On the daily and weekly timeframes, the chances of a strong, lasting trend remain high. Throughout 2026, "black swans" supported the dollar and arrived in markets almost in flocks. However, any long-term rise in the dollar is a correction. Perhaps that correction has now ended.
For October 19 we highlight the following trading levels — 1.1092, 1.1154–1.1165, 1.1221, 1.1274, 1.1362–1.1368, 1.1461–1.1473, 1.1536–1.1542, 1.1585, 1.1657–1.1665, as well as Senkou Span B (1.1271) and Kijun-sen (1.1191). Ichimoku lines may shift during the day, so account for them when defining trading signals. Don't forget to move your Stop Loss to breakeven once price has moved 15 pips in the correct direction — this will protect against potential losses if the signal proves false.
No major data releases are scheduled in the Eurozone or the US on Monday, so today may be quite dull for traders, with low volatility. Expect calm, technical price action.
Traders may consider short targets around 1.1154–1.1165 and 1.1092 if price closes below the Kijun?sen line. If price breaks above 1.1221, consider long targets in the 1.1271–1.1274 area.
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