On Wednesday, the EUR/USD pair reversed in favor of the euro and recovered toward the 127.2% Fibonacci retracement level at 1.1220. A rebound from this level today would bring the bears back into the market, potentially allowing them to resume their attacks toward the 1.1081–1.1086 support level. A sustained move above 1.1220 would allow traders to anticipate further growth toward the next retracement level of 100.0% at 1.1325.

The wave structure on the hourly chart remains bearish. The latest completed downward wave broke below the previous low, while the new upward wave has so far broken above the previous peak. Following the September FOMC meeting, traders expect at least one more monetary policy tightening before the end of the year and another next year. This factor continues to provide the strongest support for the US dollar, while other factors have little significance. The bears have gained momentum, which is also helping the dollar strengthen.

The news background on Wednesday favored the bears, but the situation is not as straightforward as it may have appeared at first glance. US inflation rose more than traders expected, but will the increase in consumer prices in September be sufficient for the FOMC to adopt an even more hawkish stance? Under current circumstances, a more hawkish stance would imply two rate hikes before the end of the year. It is worth recalling that over the past two weeks, virtually all FOMC members have delivered speeches, and not one of them even hinted at such a scenario. Thus, before the inflation report was released, none of the Fed governors appeared to anticipate two rounds of monetary policy tightening. September inflation exceeded forecasts by 0.1 percentage points. Core inflation also exceeded forecasts by 0.1 percentage points. Is this increase too small to prompt the Fed to prepare for two rate hikes? The sharp decline in the dollar overnight indirectly indicates that the market still expects just one round of tightening, which has already been largely priced in.

On the 4-hour chart, following the formation of a fifth bullish divergence, the pair reversed again in favor of the euro and rose toward the 127.2% Fibonacci level at 1.1221. A sustained move above this level would improve the euro's prospects and allow traders to anticipate growth toward 1.1325. In my assessment, five bullish divergences should be enough to halt the bears' advance. The US inflation report does not provide sufficient grounds for expecting two rounds of monetary policy tightening before the end of the year.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 4,837 Long positions and 40,913 Short positions. The total number of Long positions held by speculators currently stands at 243,000, while the number of Short positions is 342,000. The bears remain in control, and the euro continues to be sold more frequently than it is bought. This is attributable to the complex geopolitical situation in the Middle East and Kevin Warsh's strong determination to bring inflation down. The market still believes that inflation will be reduced to 2% by any available means.

Overall, over the long term, major market participants continue to show considerable interest in the euro. Events of various kinds around the world—which have been abundant in recent years—undoubtedly affect 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 predicted in advance. As a result, traders have little choice but to adjust their strategies as circumstances unfold.

Economic Calendar for the United States and the European Union:

• European Union – Change in Industrial Production (09:00 UTC).
• United States – Producer Price Index (12:30 UTC).
• United States – Change in Retail Sales (12:30 UTC).
• United States – Change in Initial Jobless Claims (12:30 UTC).

On October 15, the economic calendar contains four entries, none of which are considered important. The impact of the economic news on market sentiment on Thursday may be limited or nonexistent.

EUR/USD Forecast and Trading Recommendations:

Long positions may be considered if the pair closes above 1.1220 on the hourly chart, with a target of 1.1325. Short positions may be considered following a rebound from 1.1220, with the 1.1081–1.1086 support level as the target.

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