On Monday, the EUR/USD pair continued its decline after rebounding from the 50.0% Fibonacci retracement level at 1.1472 toward the 23.6% Fibonacci retracement level at 1.1395. A rebound from this level would favor the euro and renewed growth within the 1.1395–1.1472 trading range. Consolidation below the 1.1395 level would allow traders to expect a continuation of the decline toward the next Fibonacci retracement level of 0.0% at 1.1325.

The wave structure on the hourly chart remains bearish despite the prolonged (but weak) advance by the bulls. The last completed downward wave failed to break below the previous low, while the most recent upward wave has not yet exceeded the previous peak. The geopolitical situation has deteriorated again, as Iran and the United States have resumed blockades of the Strait of Hormuz and active military operations. It will be possible to conclude that the bearish trend has ended only after the pair breaks above the 1.1473 peak. However, for the past three weeks, the bulls have demonstrated nothing but weakness.

There was no significant news background on Monday. However, the presence or absence of news has played little role for traders in recent weeks. Market activity remains extremely subdued, which is clearly reflected in the price action of the EUR/USD pair. Therefore, even several economic reports due today in the Eurozone and the United States are unlikely to alter the current technical picture. It should be acknowledged that the market is currently ignoring changes in the ECB's monetary policy, paying little attention to geopolitical developments, while major economic reports are not released every day. Even when they are published, they have not been sufficient to push the pair out of the 1.1395–1.1472 trading range. Therefore, in the near term, I can only recommend trading rebounds from the boundaries of this range—the classic approach to trading within a sideways market. The ECB will hold its policy meeting this week, but I do not expect it to become a major market driver. Most likely, the ECB will leave its monetary policy parameters unchanged, while its hawkish stance currently carries little weight for traders.

On the 4-hour chart, the pair remains in a sideways range. Consolidation above the 1.1411 level suggests the possibility of some additional gains. However, the price has changed direction too frequently recently, while trading activity remains subdued. No emerging divergences are currently observed on any indicator. The descending trend channel remains valid.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 6,877 Long positions and 3,255 Short positions. Over the seven weeks spanning February and March, the bulls' overwhelming advantage disappeared due to the war involving Iran. During the past sixteen weeks, positioning has become more balanced amid the fragile ceasefire and hopes for an end to the conflict. Speculative traders currently hold 230,000 Long positions and 245,000 Short positions.

Overall, from a long-term perspective, large market participants continue to show considerable interest in the euro. Naturally, global events of various kinds—which have been abundant in recent years—continue to influence investor sentiment. In particular, the market remains focused on developments in the Middle East, where the conflict repeatedly subsides and then escalates again. The market initially ignored the ceasefire and subsequently paid little attention to the renewed outbreak of hostilities. As a result, geopolitical developments are no longer the sole factor determining the direction of the U.S. dollar.

U.S. and Eurozone Economic Calendar:

• Eurozone – ZEW Economic Sentiment Index (09:00 UTC).
• Germany – ZEW Economic Sentiment Index (09:00 UTC).

The economic calendar for July 21 contains two events, neither of which can be considered particularly important. Therefore, the impact of the economic backdrop on market sentiment on Tuesday is expected to be limited or negligible.

EUR/USD Forecast and Trading Tips:

Long positions may be considered today following a rebound from the 1.1395 level on the hourly chart, with targets at 1.1438 and 1.1472. New short positions may be considered if the pair consolidates below the 1.1395 level on the hourly chart, with a target of 1.1325. Market movements remain extremely subdued.

Fibonacci retracement levels are drawn from 1.1620 to 1.1325 on the hourly chart and from 1.1411 to 1.1850 on the 4-hour chart.