Analysis of EUR/USD 5M

The EUR/USD currency pair continued its practically flat movement throughout Thursday. Despite yesterday being the first ECB meeting of the year, the market did not react to it at all. In principle, this is not surprising, as the central bank did not make any decisions regarding monetary policy and did not hint at future changes in interest rates. Christine Lagarde's speech also did not provide any new information. The only thing traders learned is that the ECB does not consider an inflation rate of 1.7% too low, and that it will require immediate intervention from the central bank in the form of rate cuts. Therefore, if the slowdown in inflation does not persist in the coming months, there is no basis for "dovish" expectations.

Throughout the day, the euro felt stable, while the market shifted its focus to the British pound. The price is below the Ichimoku indicator lines and has previously broken through the trend line. Thus, we maintain a downward trend on the hourly timeframe. We see no reason for further declines in the European currency. Perhaps reasons for this may arise next week if the U.S. labor market and unemployment reports turn out unexpectedly better than forecasts. But it is currently quite difficult to believe that. Thus, after a sharp 500-pip rise, the euro entered a technical correction and... stopped in anticipation.

On the 5-minute timeframe, no trading signals were formed throughout the day. Therefore, there were no grounds for traders to enter the market. Volatility during the day was minimal.

COT Report

The latest COT report is dated January 27. In the illustration above, it is clearly visible that the net position of non-commercial traders remains "bullish." Since Trump took office for a second term as President of the United States, the dollar has only been falling. We cannot say with 100% certainty that the decline of the U.S. currency will continue, but current developments around the world suggest this is a possibility.

We still do not see any fundamental factors that would strengthen the European currency, while there are enough factors that would weaken the U.S. currency. The global downward trend is still intact, but what does it matter now, where the price has moved over the past 18 years? Over the past three years, a new upward trend has been forming, breaking the global descending trendline. Perhaps this trendline caused the downward pullback.

The position of the red and blue lines of the indicator continues to indicate the preservation of the "bullish" trend. Over the last reporting week, the number of longs held by the "Non-commercial" group increased by 15,100, while the number of shorts decreased by 5,300. Consequently, the net position increased by 20,400 contracts over the week.

Analysis of EUR/USD 1H

On the hourly timeframe, the EUR/USD pair continues to form an upward trend despite breaking the trend line and correcting. The pair has officially left the sideways channel 1,1400-1,1830, where it spent seven months. Therefore, in 2026, we still anticipate the growth of the European currency. For the technical restoration of the upward trend, it is now necessary to consolidate the price above the Ichimoku indicator lines.

For February 6, we highlight the following trading levels: 1,1362, 1,1426, 1,1542, 1,1604-1,1615, 1,1657-1,1666, 1,1750-1,1760, 1,1830-1,1837, 1,1907-1,1922, 1,1971-1,1988, 1,2051, 1,2095, as well as the Senkou Span B line (1,1830) and Kijun-sen (1,1865). The Ichimoku indicator lines may move during the day, which should be taken into account when determining trading signals. Do not forget to set a stop-loss order at breakeven if the price moves in the right direction by 15 pips. This protects against potential losses if the signal turns out to be false.

On Friday, no important events are scheduled in the European Union. The only noteworthy report is on industrial production in Germany. In the U.S., there is an interesting but not highly significant consumer sentiment index from the University of Michigan. The week may end quite dull, which is unlikely to have been expected by anyone on Monday.

Trading Recommendations:

On Friday, traders may trade from the area of 1,1830-1,1837. New long positions will become relevant if the price consolidates above this area, with targets at 1,1904-1,1922. Short positions can be considered on a new bounce from the area, with a target of 1,1750-1,1760.

Explanations for Illustrations:

• Price levels of support and resistance are thick red lines around which movement may end. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines shifted to the hourly timeframe from the 4-hour timeframe. They serve as strong lines.
• Extreme levels are thin red lines from which the price has previously rebounded. They are sources of trading signals.
• Yellow lines represent trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the net position size of each trader category.