The EUR/USD pair continued to decline on Monday toward the 38.2% Fibonacci retracement level at 1.1666. A rebound from this level today would favor the euro and a resumption of growth toward 1.1745 and 1.1824. A consolidation below 1.1666 would increase the likelihood of further decline toward the 23.6% Fibonacci level at 1.1568.

The wave structure on the hourly chart is currently clear. The last completed upward wave broke above the previous peak, while the new downward wave has not yet broken the most recent low. Thus, the trend has shifted back to bullish, but it remains unstable. The temporary truce between Iran and the United States supported the bulls, allowing them to form a strong upward wave. However, three weeks later, it is evident that geopolitics is once again moving in an unfavorable direction. As a result, bullish attempts may be limited or may cease altogether.

There were quite a few significant events on Monday, although most were only indirectly related to the economy. Iran attacked a U.S. military vessel in the Persian Gulf with two missiles, triggering a new phase of escalation. Shortly afterward, strikes were carried out on oil refineries in the UAE. Washington has promised to respond to Iran's aggression, so a resumption of military action in the Middle East is possible this week.

In addition, Donald Trump accused the European Union of undermining a trade agreement reached last summer. The European Parliament has yet to ratify the deal, leaving tariffs on U.S. imports in place. The U.S. president threatened to raise tariffs on European automotive products to 25%. Brussels immediately responded that such a move would be considered a violation of existing agreements and that the EU would retaliate with its own tariff increases. Thus, the situation in the Middle East remains far from peaceful, and Trump's trade war in 2026 could take on new momentum. For now, the market is paying more attention to developments in the Middle East, as new U.S. tariffs no longer surprise investors after 2025. Bears have gained strength for a second consecutive day, driven by geopolitical factors.

On the 4-hour chart, the pair reversed in favor of the U.S. dollar and began declining toward the 76.4% retracement level at 1.1617. A rejection from the 1.1778 level again suggests the possibility of further downside. In my view, the hourly chart is currently more informative due to the relatively weak price movements. Bulls seized the initiative about a month ago but are now searching for new growth drivers. No emerging divergences are observed in any indicators at this time.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 316 long positions and opened 5,296 short positions. Over seven weeks in February and March, the bulls' overwhelming advantage disappeared, and over the past five weeks, the situation has somewhat stabilized. The total number of long positions held by speculators now stands at 217,000, compared to 181,000 short positions. The gap is once again widening in favor of the euro.

Overall, in the long term, large players continue to show strong interest in the euro. Naturally, global events—of which there has been no shortage in recent years—continue to influence investor sentiment. At present, the market's focus remains on the Middle East, where the conflict has only been paused, not resolved. Therefore, in the near term, the euro and dollar exchange rates will depend less on Federal Reserve or ECB monetary policy and economic data, and more on developments in Iran.

Economic Calendar (U.S. and Eurozone):

Eurozone: Speech by ECB President Christine Lagarde (12:30 UTC)

U.S.: ISM Services PMI (14:00 UTC)

U.S.: JOLTS Job Openings (14:00 UTC)

U.S.: New Home Sales (14:00 UTC)

On May 5, the economic calendar includes four events, two of which are of particular interest. The impact of the news flow on market sentiment may become noticeable in the second half of the day.

EUR/USD Forecast and Trading Tips:

Selling the pair is possible today if it consolidates below 1.1666 on the hourly chart, with a target of 1.1568. Buy positions were previously recommended on a rebound from 1.1666 with a target of 1.1745, which has already been reached. New buy opportunities may arise again on a rebound from 1.1666 with a target of 1.1745.

Fibonacci retracement levels are drawn from 1.2082 to 1.1410 on the hourly chart and from 1.1474 to 1.2082 on the 4-hour chart.