On Friday, the EUR/USD pair continued its modest decline, but that now seems irrelevant. At the Monday open, the euro plummeted by over 100 points, significantly altering the technical landscape. The pair consolidated below the 76.4% Fibonacci level at 1.0263, suggesting a potential continuation of the downtrend towards the next corrective level of 100.0% at 1.0179.

If the pair consolidates above 1.0263, we might see a modest recovery towards 1.0315 and 1.0346.

The wave structure remains relatively clear. The last completed upward wave broke through the previous peak. The latest downward wave (still ongoing) has breached the lows of the previous two waves. This indicates a trend reversal towards a bearish market or possibly a complex sideways movement on higher timeframes.

On Friday, the fundamental backdrop could have triggered another decline in the euro as all German economic reports underperformed traders' expectations. However, the decline didn't materialize on Friday, but it hit hard on Monday.

Friday's German data, however, had nothing to do with the euro's collapse—or the British pound's for that matter.

On Sunday, it became clear that Donald Trump's threats were not empty, as the U.S. president imposed tariffs on imports from Mexico, Canada, and China:

• Mexico: 25% tariff
• Canada: 25% tariff
• China: 10% tariff

This news shook the markets on Monday—affecting not just currency markets but broader financial markets as well.

Interestingly, despite the negative tone of this development, it was the U.S. dollar that strengthened. This suggests that traders welcomed America's tariff measures.

On the 4-hour chart, the pair reversed in favor of the U.S. dollar after a bearish divergence appeared on the CCI indicator, pushing the pair down to the 161.8% retracement level at 1.0225. If the pair consolidates below 1.0225, expect a continuation of the decline towards 1.0110. A rebound from 1.0225 would favor the euro and could prompt a recovery towards 1.0332. Currently, there are no emerging divergences on any indicators.

Commitments of Traders (COT) Report:

In the latest reporting week, professional traders closed 14,005 long positions and 9,887 short positions. The Non-commercial traders' sentiment remains bearish, implying further declines for the pair:

• Total long positions: 153,000
• Total short positions: 220,000

For nineteen consecutive weeks, large players have been selling the euro—indicating a persistent bearish trend. While bulls may occasionally dominate in individual weeks, this is more the exception than the rule.

The primary factor behind the dollar's earlier weakness—expectations of FOMC monetary policy easing—has been priced in. The market now has no immediate reason to sell the dollar. While new factors may emerge over time, the U.S. dollar's strength remains more likely. Technical analysis also supports the continuation of the long-term bearish trend, suggesting further declines in EUR/USD.

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

• Eurozone: German Manufacturing PMI (08:55 UTC)
• Eurozone: Manufacturing PMI (09:00 UTC)
• Eurozone: Consumer Price Index (10:00 UTC)
• U.S.: Manufacturing PMI (14:45 UTC)
• U.S.: ISM Manufacturing PMI (15:00 UTC)

The economic calendar on February 3 includes several important events. However, the impact of these reports on market sentiment is expected to be moderate given the current focus on trade tariffs.

EUR/USD Forecast and Trader Recommendations:

Sell positions could have been opened targeting 1.0376 and 1.0346, as the pair consolidated below the upward trend channel on the hourly chart. All targets have been exceeded significantly.

I would not recommend buying today, as the pair has closed below the upward channel on the hourly chart. New short positions are also risky and untimely at this point.

Fibonacci Levels:

• Hourly chart: 1.0179–1.0533
• 4-hour chart: 1.0603–1.1214