On Thursday, the EUR/USD pair reversed once again in favor of the U.S. dollar and consolidated below the 50.0% Fibonacci retracement level at 1.1745. As a result, the pair's decline may continue today toward the next Fibonacci level of 38.2% at 1.1666. However, everything today will depend on the news background. A close above the 1.1745 level would once again allow bulls to launch attacks toward the 61.8% corrective level at 1.1824.

The wave structure on the hourly chart currently raises no concerns. The latest completed upward wave exceeded the previous peak by only a few points, while the new downward wave broke below the previous low. Thus, the trend has once again shifted to bullish, although it remains highly unstable, as all recent waves have been roughly equal in size. The temporary ceasefire between Iran and the U.S. supported the bulls, but now, three weeks later, it can be said that geopolitical developments are moving toward prolonging the conflict. Therefore, bullish attacks may remain limited or stop entirely.

On Thursday, the news background was extremely weak, so traders remained mostly inactive throughout the day. By evening, strange and unexplained explosions occurred in Iran, while Donald Trump once again toughened his rhetoric toward Tehran. No information has yet been provided regarding the causes or sources of the explosions. Trump stated that the ceasefire between Iran and the U.S. remains in force, but at the same time emphasized that America is prepared to resume strikes against Iran if it does not sign an agreement.

"Iran is run by crazy people. If they had the opportunity to use nuclear weapons, they would have done it long ago. But they will never have that opportunity. We will destroy them if they do not sign an agreement," Donald Trump wrote on social media.

Thus, the entire situation once again resembles an attempt to pressure Iran into accepting a deal on U.S. terms. Traders do not possess complete information regarding the negotiations, making it extremely difficult to draw confident conclusions. However, at this point, even a framework agreement or memorandum of understanding has not yet been agreed upon or signed. The conflict is dragging on, and so are the negotiations. The longer this continues, the greater the likelihood of renewed conflict.

On the 4-hour chart, the pair reversed in favor of the U.S. dollar and began declining toward the 76.4% corrective level at 1.1617. A rebound from the 1.1778 level once again supports expectations for further downside movement. In my view, the hourly chart is currently more informative due to weak overall price action. Bulls seized the initiative in the market about a month ago but are now searching for new growth drivers. No emerging divergences are currently observed on any indicators.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 316 long positions and opened 5,296 short positions. Over seven weeks in February and March, the bulls' total advantage disappeared, while over the last five weeks the situation has become somewhat more balanced. The total number of long positions held by speculators now stands at 217,000, while short positions amount to 181,000. The gap is once again widening in favor of the euro.

Overall, in the long term, major market participants continue to view the euro with considerable interest. Naturally, various global events — which have been abundant in recent years — continue to influence investor sentiment. At present, market attention remains focused on the Middle East, where the conflict has merely been paused rather than ended. Therefore, in the near future, the euro and dollar exchange rates will depend less on Federal Reserve or ECB monetary policy and economic data, and more on developments in Iran.

Economic Calendar for the U.S. and the Eurozone:

• Germany – Industrial Production Change (06:00 UTC)
• Eurozone – Speech by ECB President Christine Lagarde (07:00 UTC)
• U.S. – Nonfarm Payrolls Change (12:30 UTC)
• U.S. – Unemployment Rate (12:30 UTC)
• U.S. – Average Hourly Earnings Change (12:30 UTC)
• U.S. – University of Michigan Consumer Sentiment Index (14:00 UTC)

The May 8 economic calendar contains six entries, with all U.S. releases considered important. The impact of the news background on market sentiment could be strong during the second half of Friday.

EUR/USD Forecast and Trading Tips:

Selling opportunities may be considered today if the pair consolidates below the 1.1745 level on the hourly chart, targeting 1.1666. Buying positions may be considered if the pair consolidates above the 1.1745 level, with a target at 1.1824.

Fibonacci retracement levels are drawn from 1.2082–1.1410 on the hourly chart and from 1.1474–1.2082 on the 4-hour chart.