On Thursday, EUR/USD reversed in favor of the European currency and consolidated above the 61.8% retracement level at 1.1473. Thus, the upward move may continue toward the next Fibonacci level of 50.0% at 1.1519. Consolidation below 1.1473 would favor the U.S. dollar and a resumption of the decline toward the 76.4% retracement level at 1.1416.

The wave situation on the hourly chart has turned bearish. The latest completed upward wave failed to break the previous peak, while the latest downward wave broke the previous low. Geopolitical conditions remain consistently negative and have every chance of deteriorating in the near future. The market expects several stages of FOMC monetary policy tightening by the end of the year. These two factors have brought bearish traders back into the market.

The fundamental backdrop on Thursday allowed the bears to take a short pause. On Friday morning, Germany's Producer Price Index was released, showing an increase to 4.6% compared with the forecast of 4.1%. Thus, Germany's Consumer Price Index may accelerate in the near future. According to yesterday's report, inflation in the European Union rose to 3.2% and has generally been increasing throughout the current year. Thus, by the end of September, all inflation indicators could rise even further, potentially forcing the ECB to raise interest rates once more before the end of the year. Meanwhile, U.S. President Donald Trump hinted at a possible resumption of the armed conflict with Iran in the very near future. According to Trump, he faces a difficult decision, and the resumption of active hostilities is a plausible scenario. Accordingly, a new escalation could occur in the Middle East, and oil prices, which have only just returned to $100 per barrel, could quickly rise to $120 or even higher. Inflation would then follow oil prices higher.

On the 4-hour chart, the pair consolidated below the 38.2% retracement level at 1.1526 and continued to decline toward the next Fibonacci level, 23.6%, at 1.1449. A rebound from 1.1449 would allow for a reversal in favor of the European currency and some growth toward 1.1526. Consolidation below 1.1449 would increase the probability of further decline toward the next 0.0% retracement level at 1.1325. No emerging divergences are observed on any of the indicators today.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 4,968 Long positions and opened 12,723 Short positions. Over seven weeks in February and March, the bulls' overwhelming advantage evaporated because of the war in Iran, while over the past 24 weeks, the situation has become more balanced amid market hopes for an end to the conflict. The total number of Long positions held by speculators currently stands at 198,000, while the number of Short positions stands at 241,000. The bears remain in the lead, but their advantage is narrowing.

Overall, over the long term, large market participants continue to show strong interest in the euro. Clearly, events of various kinds around the world—which have been abundant in recent years—affect investor sentiment. In particular, the market is currently keeping a close eye on the situation in the Middle East, where the war seems to end and then start again. However, geopolitics no longer determines the dollar's fate on its own.

News Calendar for the United States and the European Union:

• European Union – Speech by ECB President Christine Lagarde (10:30 UTC).
• United States – Change in industrial production volumes (13:15 UTC).

The September 18 economic calendar contains two entries, neither of which is attracting attention. The impact of the economic backdrop on market sentiment on Friday may be extremely weak or nonexistent.

EUR/USD Forecast and Trading Advice:

Buying opportunities arose following a close above 1.1473 on the hourly chart, with targets at 1.1519 and 1.1564. These trades can remain open today. New short positions are possible following consolidation below 1.1473, with a target of 1.1416.

The Fibonacci level grids are drawn from 1.1325–1.1712 on the hourly chart and from 1.1849–1.1325 on the 4-hour chart.