EUR/USD continued to trade sideways on Wednesday. As of Thursday morning, the pair's quotes remain above the 127.2% Fibonacci retracement level at 1.1220, allowing for a potential rise toward the 100.0% Fibonacci level at 1.1325. A consolidation below 1.1220 would favor the US dollar and a potential decline toward the 1.1081–1.1086 support level.

The wave structure on the hourly chart remains bearish. The last completed downward wave broke below the previous low, while the new upward wave has not yet broken above the previous high. Following the FOMC meeting in September, traders expect at least one more monetary policy tightening before the end of the year and another next year. This factor continues to provide substantial support for the US dollar, while other factors remain largely irrelevant for now. The bears have strong momentum, which is also helping the dollar appreciate.

There was no significant economic news on Wednesday, and none is expected today, Thursday. The market is gradually preparing for next week, when central banks in the European Union and the United States will hold their meetings. Although neither central bank is likely to raise interest rates, the market is not rushing to draw conclusions or open new positions. The bears continue to maintain control of the pair, while the bulls have so far been unable to counter them. The only notable events remaining this week are the business activity indices for the services and manufacturing sectors in the United States, Germany, and the European Union, which will be released tomorrow. The US indices can largely be disregarded, as more important ISM indices are published at the beginning of each month, and traders are accustomed to using them as their primary reference. The European and German indices, however, could help the euro break out of its current stagnation. Nevertheless, all six indices are currently above the critically important 50.0 threshold, and no significant changes are expected in October.

On the 4-hour chart, following the formation of a fifth bullish divergence, the pair reversed in favor of the euro and rose toward the 127.2% Fibonacci level at 1.1221. A consolidation above this level would open the way for a rise toward 1.1325. A consolidation below 1.1221 would favor the US dollar and a resumption of the decline toward the 161.8% Fibonacci retracement level at 1.1088. No developing divergences are currently visible.

Commitments of Traders (COT) Report:

During the latest reporting week, institutional traders closed 20,091 Long positions and opened 18,150 Short positions. The total number of Long positions held by speculators currently stands at 223,000, compared with 360,000 Short positions. The bears remain in control, and the euro continues to be sold more frequently than it is bought. This is attributed to the challenging geopolitical situation in the Middle East and Kevin Warsh's determination to bring inflation down. The market continues to believe that inflation will be reduced to 2% by any available means.

Overall, major market participants remain strongly interested in the euro over the long term. Naturally, global events of various kinds—which have been abundant in recent years—influence investor sentiment and put pressure on risk-sensitive currencies. Moreover, 2026 could set a record for the number of events that could not have been anticipated in advance. As a result, traders have little choice but to adapt to the changing environment as events unfold.

Economic Calendar for the United States and the European Union:

• United States – Change in Initial Jobless Claims (12:30 UTC).

On October 22, the economic calendar contains just one event, which traders are unlikely to pay much attention to. Economic news is not expected to influence market sentiment on Thursday.

EUR/USD Forecast and Trading Recommendations:

Buying the pair is possible following a rebound from 1.1220 on the hourly chart, with a target of 1.1325. Selling is possible if the pair closes below 1.1220, with the 1.1081–1.1086 support level as the target. The 1.1220 level has not performed particularly well in recent days, and the signals forming around it have been weak.

The Fibonacci retracement levels are drawn from 1.1325 to 1.1712 on both the hourly and 4-hour charts.