The EUR/USD pair reversed in favor of the US dollar on Thursday, initiating a new downward movement that may signal the start of a fresh downtrend. The pair consolidated below the 61.8% Fibonacci retracement level at 1.0722, indicating further potential decline towards the 76.4% retracement level at 1.0676. A bounce from the 1.0722 level today would confirm the bears' intent to launch another assault. Consolidation above 1.0722 suggests bulls remain unsatisfied during this current corrective wave.

The wave pattern remains clear. The new downward wave breached the low of the previous wave from June 11, while the latest completed upward wave failed to surpass the peak of the preceding wave. Hence, the "bearish" trend persists and continues to develop. In the near future, the news backdrop shouldn't hinder bears from sustaining pressure. After completing the upward correction, the pair's decline is anticipated to resume. A breakthrough of the peak from the last upward wave on June 12 would signify a potential end to the "bearish" trend. Nevertheless, bulls are unlikely to muster enough strength in the coming days to propel the pair towards the 1.0850 level.

Thursday's informational background was relatively weak, despite numerous US news releases. Specifically, the following reports were published: new home sales reached 1.37 million (exceeding expectations), building permits totaled 1.45 million (above expectations), the Philadelphia Fed Manufacturing Index registered 1.3 (below expectations), and initial jobless claims were at 235 thousand (below forecasts). Thus, three out of four reports favored bears, who capitalized on their potential throughout the day.

On the 4-hour chart, the pair reversed in favor of the euro following a "bullish" divergence on the RSI indicator. Quotes closed above the 61.8% Fibonacci level at 1.0714, yet I remain skeptical about a sustained euro rally. Last week, the 4-hour chart closed below the trend line, shifting trader sentiment to "bearish." Therefore, a minor correction is expected, followed by a resumption of the downtrend. Consolidation below the 1.0714 level would confirm a renewed decline towards the 76.4% Fibonacci level at 1.0613.

Commitments of Traders (COT) Report:

During the last reporting week, speculators closed 1,260 Long contracts and opened 22,966 Short contracts. The sentiment among "Non-commercial" traders turned "bearish" several weeks ago, and sellers are currently increasing their positions. The total number of Long contracts held by speculators now stands at 187 thousand, while Short contracts amount to 144 thousand, narrowing the gap.

I maintain the view that the situation will continue favoring bears. There are no long-term reasons to support euro purchases, given the ECB's easing of monetary policy, which will reduce yields on bank deposits and government bonds. Meanwhile, US rates are expected to remain high for several months, making the dollar more attractive to investors. The potential for a decline in the euro remains considerable, even according to the COT report. If major players are still bullish now and the euro is falling, one can only imagine its position when sentiment turns bearish.

News Calendar for the US and Eurozone:

Eurozone – Germany Manufacturing PMI (07:30 UTC)

Eurozone – Germany Services PMI (07:30 UTC)

Eurozone – Manufacturing PMI (08:00 UTC)

Eurozone – Services PMI (08:00 UTC)

US – Manufacturing PMI (13:45 UTC)

US – Services PMI (13:45 UTC)

June 21 has an interesting lineup of economic events. The impact of the news background on traders' sentiment today may be weak.

Forecast for EUR/USD and Trading Tips:

Selling opportunities arose on a rebound from the 1.0760 level on the hourly chart with targets at 1.0676 and 1.0602. These trades can still be held open. New selling opportunities today could occur on a rebound from the 1.0722 level. Buying the euro could be considered today on the hourly chart on a rebound from the 1.0676 level with a target of 1.0722.

Fibonacci retracement levels are set between 1.0602–1.0917 on the hourly chart and 1.0450–1.1139 on the 4-hour chart.