The EUR/USD pair traded sideways during Friday with a slight downward bias. The new week began below the 100.0% corrective level at 1.1577, which means the decline in quotes may continue toward the next corrective level of 127.2% – 1.1440. If the pair consolidates above 1.1577, it would favor the euro and allow some growth toward the 76.4% Fibonacci level at 1.1696.
The wave situation on the hourly chart remains simple. The last completed upward wave did not break the peak of the previous wave, while the new downward wave confidently broke the previous low. Thus, the trend remains bearish. The bulls have paused within the framework of a large-scale advance that would have been impossible without Donald Trump. However, Donald Trump's actions in the Middle East — which triggered large-scale military activity involving about a dozen countries — are now working in favor of the U.S. dollar.
On Friday, the news background was not only strong but also important, especially for the prospects of the U.S. dollar. However, by the end of the day traders showed complete disinterest in the economic data. Otherwise, it is difficult to explain the rise of the dollar following the Nonfarm Payrolls and Unemployment Rate reports. Bulls attempted a small attack at the very end of the week, which could even be seen as a reaction to the published statistics. However, the decline of the U.S. currency was so weak that I would not call it a genuine "market reaction."
Monday began with renewed attacks from the bears after Donald Trump over the weekend allowed for the possibility of a ground operation in Iran. It should be recalled that, according to many experts, without a ground operation it will not be possible to seize or destroy all enriched uranium. Most nuclear facilities in Iran are located deep underground, and missile strikes do not guarantee the destruction of the uranium or even a direct hit on the storage sites. Donald Trump did not actually promise such an operation in the near future — he merely allowed for the possibility that it could happen in the future. Nevertheless, traders reacted quite strongly to this statement. While the U.S. dollar rose only slightly amid its recent gains, oil at one point reached $110–120 per barrel, and the U.S. stock market resumed its decline.
On the 4-hour chart, the pair consolidated below the 23.6% corrective level at 1.1577, allowing traders to expect a continuation of the decline toward the next Fibonacci level of 0.0% – 1.1471. A close above 1.1577 would favor the euro and allow some growth within the downward trend channel toward 1.1642 and 1.1694. No new emerging divergences are observed on any indicators.
Commitments of Traders (COT) Report
During the last reporting week, professional traders closed 287 long positions and opened 20,071 short positions. The sentiment of the "Non-commercial" group remains bullish thanks to Donald Trump and his policies, but in recent weeks we have been seeing a reduction in long positions. The total number of long positions held by speculators now stands at 294,000, while short contracts total 158,000. The bulls still maintain nearly a two-to-one advantage.
Overall, over the longer term large players continue to reduce short positions and increase long ones. Of course, various global events — which have been plentiful in recent years — influence investors in different ways. At the moment, all market attention is focused on the Middle East, where the war continues to escalate and expand geographically. Thus, in the near future the euro and dollar exchange rate will depend not on Federal Reserve monetary policy or economic data, but on the war in Iran.
News calendar for the United States and the European Union
European Union – Change in German industrial production (07:00 UTC).
On March 9, the economic calendar contains only one minor entry. Therefore, the information background will not influence market sentiment on Monday. Friday showed that the market is not willing to sell the dollar under any circumstances.
EUR/USD forecast and trading advice
Selling opportunities were available when the pair rebounded from the 1.1830 level on the hourly chart with targets at 1.1770, 1.1696, and 1.1577. All targets were reached. New sell positions were possible after a close below 1.1577 with a target of 1.1440. Buy positions can be considered if quotes consolidate above 1.1577, with a target of 1.1696.
Fibonacci level grids are built from 1.1805–1.1578 on the hourly chart and 1.1919–1.1471 on the 4-hour chart.
