The EUR/USD pair continued its decline toward the 100.0% Fibonacci retracement level at 1.1409 on Friday. This movement may continue on Monday, as the geopolitical environment remains highly unfavorable for bulls and exceptionally contradictory. A rebound from the 1.1409 level would favor the euro and allow for a modest recovery toward the 76.4% Fibonacci level at 1.1514. Consolidation below 1.1409 would increase the likelihood of a continued decline toward the next Fibonacci level of 127.2% at 1.1291.

The wave structure on the hourly chart has changed once again. The last completed upward wave broke above the previous peak, but the new downward wave also broke below the previous low. Thus, the trend has turned bearish again. Geopolitical conditions improved significantly over recent weeks, but the Federal Reserve triggered a new wave of bearish pressure. A full-scale bearish move would require additional factors, which I do not currently see, but bulls are offering virtually no resistance at the moment.

There were very few significant events or news releases on Friday. However, information from the Middle East began emerging on Sunday, and it can hardly be described as positive. Iran has once again imposed a blockade on the Strait of Hormuz in response to the continuing military actions by Israel against Lebanon. Negotiations between the United States and Iran regarding a nuclear agreement are once again at risk of collapse, although the first round of talks did take place on Sunday. At this stage, no firm conclusions can be drawn. Some media outlets report signs of progress, while others describe the talks as unsuccessful. Reliable information remains unavailable. During the night, Donald Trump stated that he would order new strikes against Iran if a nuclear agreement is not signed. He also urged Tehran not to allow the war between Israel and Lebanon to derail negotiations with Washington. Officials in Tehran stated that the terms of the agreement signed last week are not being fulfilled by the United States, and therefore the Strait of Hormuz will remain closed. As a result, bears enter the new trading week with fresh opportunities to extend their pressure on the market.

On the 4-hour chart, the pair continues to decline toward the 100.0% Fibonacci retracement level at 1.1411. A rebound from this level would provide some relief for the euro and create an opportunity for a corrective move toward the 76.4% retracement level at 1.1514. Consolidation below 1.1411 would increase the likelihood of a further decline. No developing divergences are currently observed on any indicator.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 15,878 Long positions and opened 19,056 Short positions. Over the seven weeks in February and March, the bulls' overwhelming advantage disappeared due to the war in Iran. Over the following eleven weeks, the situation stabilized amid the suspension of hostilities in the Middle East, and bulls have once again regained dominance. The total number of Long positions held by speculators currently stands at 219,000, while the number of Short positions amounts to 205,000.

Overall, from a long-term perspective, large market participants continue to view the euro favorably. Naturally, global developments of various kinds—which have been abundant in recent years—continue to influence investor sentiment. At present, market attention remains focused on the Middle East, where the conflict has merely been paused rather than resolved. Therefore, in the near term, the euro and the dollar will depend less on Federal Reserve and ECB monetary policy or economic data, and more on developments in Iran.

News Calendar for the United States and the European Union:

June 22 contains no notable economic events. Therefore, the economic backdrop is unlikely to influence market sentiment on Monday.

EUR/USD Forecast and Trading Tips:

Long positions may be considered today if the pair rebounds from the 1.1411 level on the hourly chart, with a target at 1.1514. Short positions could previously have been opened following a close below 1.1578 and another close below 1.1514, with a target at 1.1411. The target was almost reached. New short positions may be considered after consolidation below 1.1411, with a target at 1.1291.

Fibonacci retracement grids are plotted from 1.1411 to 1.1850 on both the hourly and the 4-hour charts.