EUR/USD continued to trade sideways on Friday, around 1.1220. As of Monday morning, the pair is trading below the 127.2% retracement level at 1.1220, suggesting the possibility of a decline toward the 161.8% Fibonacci level at 1.1086. Consolidation above 1.1220 would favor the euro and could lead to a rise toward the 100.0% retracement level at 1.1325. Trader activity has remained low for more than a week.

The wave structure on the hourly chart remains bearish. The latest completed upward wave failed to break below the previous low, while the new downward wave has not yet broken below the previous low either. Following the September FOMC meeting, traders expect at least one more monetary policy tightening before the end of the year and another next year. This factor continues to provide strong support for the US dollar, while other factors have little significance for now. The bears remain firmly in control, which is also helping the dollar maintain its strength.

The news background on Friday allowed the bears to continue their advance but also provided some support for the bulls. Business activity indices in the European Union came in below traders' expectations, prompting a slight decline in the euro during the morning session. However, the US dollar had an opportunity to strengthen further in the second half of the day, as US business activity indices showed positive momentum in October. Nevertheless, the bears quickly lost momentum, and the market indicated that it intended to wait for the ECB and Federal Reserve meetings. It will be difficult for the euro to receive support from the European regulator this week. The ECB has clearly outlined its path for interest rates and continues to follow its established course. Therefore, a more hawkish tone from Christine Lagarde is unlikely. If even monetary policy tightening over the past two months failed to prompt the bulls to launch an advance, traders are unlikely to find additional reasons to buy the euro after Thursday's ECB meeting.

On the 4-hour chart, following the formation of a fifth bullish divergence, the pair reversed in favor of the euro again and rose toward the 127.2% Fibonacci level at 1.1221. Consolidation above this level would support a further rise toward 1.1325. Consolidation below 1.1221 would favor the US dollar and the resumption of the decline toward the 161.8% retracement level at 1.1088. No emerging divergences are visible today.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 3,492 Long positions and 443 Short positions. Speculators now hold a total of 226,000 Long positions and 361,000 Short positions. The bears remain in control, and the euro continues to be sold more often than it is bought. This is explained by the difficult geopolitical situation in the Middle East and Kevin Warsh's determination to bring inflation down. The market continues to believe that inflation will be reduced to 2% by any available means.

Overall, major market participants remain interested in the euro over the long term. Global events of various kinds, which have been abundant in recent years, inevitably affect investor sentiment and put pressure on risk-sensitive currencies. Furthermore, 2026 could set a record for the number of events that could not have been anticipated in advance. Traders must therefore continue adapting to changing market conditions as they unfold.

Economic Calendar for the US and the European Union:

• Germany – Business Climate Index (09:00 UTC).

The economic calendar for October 26 contains just one release, which is unlikely to attract significant interest. The economic news background is expected to have no meaningful impact on market sentiment on Monday.

EUR/USD Forecast and Trading Tips:

Buying opportunities may arise if the pair closes above 1.1220 on the hourly chart, with a target of 1.1325. Selling opportunities may arise if the pair closes below 1.1220, with the support level at 1.1081–1.1086 as the target. The 1.1220 level has not performed reliably in recent days, and the signals forming around it have been false.

The Fibonacci levels are drawn from 1.1325 to 1.1712 on both the hourly and 4-hour charts.