On Monday, the EUR/USD pair continued a mild downward movement. After reaching the 127.2% retracement level at 1.1712, the pair neither rebounded nor consolidated. Therefore, the 1.1712 level should not be used today for trading signals. The chart setup continues to support the decline of the euro, as a new downward wave has begun to form. However, I do not expect strong gains for the U.S. dollar.

The wave structure on the hourly chart remains simple and clear. The last completed downward wave broke the low of the previous wave, while the most recent upward wave broke the previous high. Thus, the trend remains "bullish" at this time. The lack of real progress in the U.S. trade negotiations and the low likelihood of agreements with most countries still discourages bears from mounting aggressive attacks.

The news background on Monday was both absent and present. In the European Union, retail sales data was released, and in Germany – industrial production. However, without even mentioning the figures, I can say these reports had no impact on the euro. In the U.S., no reports were published, but overnight Donald Trump announced new tariff hikes on imports from 15 countries. As expected, the tariffs will take effect on August 1, targeting countries that have not shown sufficient eagerness to negotiate with the U.S. These include Japan, South Korea, Kazakhstan, Malaysia, Tunisia, South Africa, Bosnia and Herzegovina, Indonesia, Bangladesh, Serbia, Thailand, Cambodia, Laos, and Myanmar. Tariff rates have been raised to 25–40%. The U.S. President also stated that if these countries respond with reciprocal tariffs, additional duties will be imposed on top of the existing ones. In short, the story is starting all over again. Since Trump is unable to secure trade deals, he will continue imposing and raising tariffs. There is every reason to believe that the bulls will resume their offensive in the coming days.

On the 4-hour chart, the pair consolidated above the 1.1680 level and may continue rising toward the next retracement level of 161.8% – 1.1851. A rebound from 1.1680 would increase the likelihood of renewed growth. A break below this level would open the way for a decline toward the lower boundary of the ascending trend channel. No divergences are forming on any indicator at the moment.

Commitments of Traders (COT) Report:

Over the latest reporting week, professional traders opened 1,188 Long positions and 4,786 Short positions. The sentiment of the "Non-commercial" group remains "bullish" thanks to Donald Trump and continues to strengthen over time. The total number of Long positions held by speculators is now 225,000, while Short positions stand at 117,000 — and the gap between the two (with few exceptions) keeps widening. This indicates continued demand for the euro, but not for the dollar. The situation remains unchanged.

For twenty-two consecutive weeks, large players have been reducing their Short positions and increasing their Long ones. The difference in monetary policy between the ECB and the Fed is significant, but Donald Trump's policies are a more powerful factor for traders, as they may lead to a U.S. recession and many other structural, long-term issues for the American economy.

Economic Calendar for the U.S. and Eurozone:

On July 8, the economic calendar contains no noteworthy entries. The news background will not influence market sentiment on Tuesday.

EUR/USD Forecast and Trader Recommendations:

I would not consider selling the pair today, as I do not see the 1.1712 level as strong. Long positions may be considered on a rebound from the 1.1712 level on the hourly chart with a target of 1.1802, as bulls still hold the initiative in the market, and the news background continues to support them.

Fibonacci retracement grids are drawn from 1.1574–1.1066 on the hourly chart and from 1.1214–1.0179 on the 4-hour chart.