On Thursday, the EUR/USD pair traded sideways, but holding below the support zone of 1.0336–1.0346 opens the door for continued decline towards the 127.2% retracement level at 1.0255. A rebound from this level would favor the euro and could lead to a rise towards the 1.0336–1.0346 zone, while a breakdown below this level would increase the likelihood of further decline towards the next Fibonacci level of 161.8% at 1.0154.

The wave structure remains clear. The most recent completed upward wave failed to break the peak of the previous wave, while the new downward wave appears poised to breach the last low. This indicates that the formation of the bearish trend continues with no signs of reversal. For a reversal, the euro would need to rise confidently above the 1.0460 level and close above it.

There was little significant news on Thursday. Retail sales and industrial production reports from the Eurozone and Germany failed to attract much interest from traders, who shifted their focus to Friday. Today, critical US labor market reports, including Nonfarm Payrolls, unemployment, and wage data, are expected. These reports are crucial for gauging the Federal Reserve's future policy.

In December, Fed Chair Jerome Powell indicated that monetary policy might ease slightly in 2025, potentially one or two rate cuts. However, this is merely a preliminary outlook, subject to change based on economic data. Reports like Nonfarm Payrolls and unemployment can significantly impact the Fed's stance. If the data suggests the labor market remains robust, the Fed's plans are unlikely to change, which would further support the US dollar. Conversely, weaker data could prompt expectations of more aggressive rate cuts, which would weigh on the dollar.

On the 4-hour chart, the pair has twice rebounded from the 127.2% retracement level at 1.0436 and consolidated below the 1.0332 level. This suggests that the decline may continue towards the Fibonacci level of 161.8% at 1.0225. The downward trend channel clearly reflects current market sentiment, and a strong recovery in the euro is unlikely until the pair consolidates above the channel. No significant divergences are observed today.

Commitments of Traders (COT) Report:

In the latest reporting week, speculators opened 6,800 long positions and 9,412 short positions. The sentiment among non-commercial traders remains bearish and continues to strengthen, indicating further potential decline in the pair. The total number of long positions held by speculators is now 159,000, compared to 228,000 short positions.

For fifteen consecutive weeks, large players have been reducing their exposure to the euro, which supports the continuation of the bearish trend. Occasionally, bulls dominate within specific weeks, but this is an exception rather than the rule. The key driver behind the dollar's strength—expectations of monetary policy easing by the FOMC—has already been factored into the market, and there's little reason to expect a mass dollar sell-off. Any reversal of this trend would require new developments.

Key Economic Events (US and Eurozone):

• US – Nonfarm Payrolls (13:30 UTC)
• US – Unemployment Rate (13:30 UTC)
• US – Average Hourly Earnings (13:30 UTC)
• US – Michigan Consumer Sentiment Index (15:00 UTC)

January 10 features four major economic events, which are expected to have a significant impact on market sentiment, particularly in the latter half of the day.

EUR/USD Forecast and Trading Tips:

Selling opportunities could have been found following a rebound from the 1.0405–1.0420 zone on the hourly chart, targeting 1.0336–1.0346 and 1.0255. The first target has already been achieved, and short positions can still be held. Buying is possible after a rebound from the 1.0255 level on the hourly chart, targeting the 1.0336–1.0346 zone.

Fibonacci Levels:

• Hourly chart: Built between 1.0336 and 1.0630.
• 4-hour chart: Built between 1.0603 and 1.1214.