The EUR/USD pair resumed its decline on Monday toward the 100.0% Fibonacci retracement level at 1.1409. A rebound from this level would favor the euro and support a moderate recovery toward the 76.4% Fibonacci level at 1.1514. Consolidation below 1.1409 would increase the likelihood of a continued decline toward the next retracement level of 127.2% at 1.1291.

The wave structure on the hourly chart remains bearish. The most recently completed upward wave broke above the previous peak, while the new downward wave has broken below the previous low. Geopolitical conditions have improved significantly in recent weeks. However, the Federal Reserve has triggered a renewed bearish offensive that has yet to lose momentum. Additional factors would be required for a full-scale bearish continuation, and I do not currently see such factors. Nevertheless, the bulls are offering little resistance at this stage.

A large volume of geopolitical news emerged on Monday, and traders interpreted it in different ways. Some still do not believe in the prospects of a lasting peace or a nuclear agreement between Iran and the United States. Others are increasingly optimistic about a ceasefire, lower oil prices, potentially slower inflation, and central banks refraining from further monetary tightening. In my view, the situation is indeed improving, as the parties involved in the conflict remain engaged in negotiations and are even making mutual concessions. This marks a notable change from previous months.

Therefore, I believe that cautious optimism is justified at present. However, if that is the case, why does EUR/USD continue to decline? Geopolitical tensions previously supported the bears, and now that conditions have become more favorable, bearish pressure persists. In my view, we are witnessing U.S. dollar appreciation despite improving fundamentals. It is worth recalling that the European Central Bank raised interest rates in June, a decision that was largely ignored by the market. If such factors continue to be overlooked, the dollar may continue rising regardless of the underlying news background. At present, bears remain active because they have the momentum and opportunity to do so, while bulls remain passive despite receiving support from both geopolitical and economic developments.

On the 4-hour chart, the pair continues to decline toward the 100.0% Fibonacci retracement level at 1.1411. A rebound from this level would provide the euro with temporary relief and allow for a corrective recovery toward the 76.4% retracement level at 1.1514. Consolidation below 1.1411 would increase the likelihood of further downside movement. A bullish divergence is forming on the CCI indicator, which, combined with a rebound from 1.1411, could halt the bears' advance.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 8,441 Long positions and closed 11,980 Short positions. Over seven weeks in February and March, the bulls' overwhelming advantage disappeared due to the war involving Iran. During the subsequent twelve weeks, conditions gradually normalized amid the suspension of military activity in the Middle East, and bulls have once again regained the upper hand. The total number of Long positions held by speculators now stands at 228,000, compared with 193,000 Short positions.

Overall, major market participants continue to view the euro favorably over the longer term. Naturally, a wide range of global developments—which have certainly not been in short supply in recent years—continue to influence investor sentiment. At present, market attention remains focused on the Middle East, where military activity has been paused and serious negotiations are underway that could ultimately lead to peace. However, the market continues to ignore the improvement in geopolitical conditions, as well as many other factors that support the euro.

Economic Calendar for the United States and the Eurozone:

• Germany – Manufacturing PMI (07:30 UTC).
• Germany – Services PMI (07:30 UTC).
• Eurozone – Manufacturing PMI (08:00 UTC).
• Eurozone – Services PMI (08:00 UTC).
• United States – Manufacturing PMI (13:45 UTC).
• United States – Services PMI (13:45 UTC).

The economic calendar for June 23 contains six events, with the European PMI releases deserving particular attention. Economic data may influence market sentiment throughout Tuesday's trading session.

EUR/USD Forecast and Trading Recommendations:

Long positions may be considered today if the pair rebounds from the 1.1411 level on the hourly chart, targeting 1.1514. Short positions could previously have been opened after a close below 1.1578 and after a close below 1.1514, targeting 1.1411. This target has been almost reached. New short positions may be considered after a close below 1.1411, targeting 1.1291.

Fibonacci grids are plotted from 1.1411 to 1.1850 on both the hourly chart and the 4-hour chart.