EUR/USD – 1H.
On March 4, the EUR/USD pair performed a new reversal in favor of the US currency and continued the process of falling, ending up this morning near the corrective level of 100.0% (1.1952). The rebound of the pair from this level will work in favor of the EU currency and some growth in the direction of the Fibo level of 76.4% (1.2021). Closing the pair below the level of 100.0% will increase the probability of a further fall in the direction of the next corrective level of 127.2% (1.1873). The downward trend corridor still characterizes the mood of traders as "bearish". During yesterday's day, the European Union and the United States released some rather interesting reports. For example, in Europe, it became known about a strong reduction in retail trade in January. The drop was 5.9% m/m. In the US, a report on applications for unemployment benefits was released, however, it was not interesting, since their number almost perfectly coincided with the expectations of traders. Thus, until the evening, traders were in no hurry to enter the market and were waiting for Jerome Powell's speech. I have already mentioned in previous articles that the number one topic for the markets now remains the topic of US government bond yields, which have been growing very strongly recently. Thus, Powell was expected to explain the future inflation, which, as everyone fears, including investors, could grow significantly, blocking the yield on the current bond yield. That is why the demand for Treasuries remains low, and their profitability is growing, which is not profitable for the state. Powell noted that the Fed expects to keep inflation at around 2% until the labor market fully recovers. However, he also admitted that its level can reach a higher value. Thus, Powell indirectly confirmed that inflation will rise and possibly even above 2%. And how the Fed will restrain it is not yet clear. Against this background, the yield on ten-year government bonds rose again to 1.576%.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a new reversal in favor of the US currency and closed under the Fibo level of 161.8% (1.2027). As a result, the process of falling can now be continued in the direction of the next corrective level of 127.2% (1.1729). There are no emerging divergences in any indicator today.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair have made a consolidation under the upward trend corridor, so the process of falling can continue in the direction of the corrective level of 261.8% (1.1822). The descending trend line characterizes the current mood of traders as "bearish".
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On March 4, economic reports from the US and the EU did not cause any emotions among traders. Only Powell's speech provoked a strong reaction.
News calendar for the United States and the European Union:
US - unemployment rate (13:30 GMT).
US - change in the number of people employed in the non-agricultural sector (13:30 GMT).
US - change in the average hourly wage (13:30 GMT).
US - Treasury Secretary Janet Yellen will deliver a speech (14:00 GMT).
On March 5, the calendar of economic events in the European Union is empty, and in the United States, there will be several very important reports and a speech by Janet Yellen, who can also talk about inflation and monetary policy.
COT (Commitments of Traders) report:
Last Friday, the next COT report was released and for the third week in a row, it turns out to be very calm. There are no major changes in the mood of traders. The most important category of Non-commercial traders opened 6.5 thousand long and 6.6 thousand short contracts. The "Commercial" category of traders opened 15 thousand long and 17 thousand short contracts. That is, in general, during the reporting week, the major players made purchases and sales in equal proportions. In the long term, the euro continues to show growth, and the number of long contracts focused on the hands of speculators exceeds the number of short contracts by three times. Therefore, to break the upward trend, it is necessary that speculators massively open sales, which is not yet observed.
EUR/USD forecast and recommendations for traders:
It is recommended to sell the pair at the close of quotes under the level of 100.0% (1.1952) with a target of 1.1873 on the hourly chart. I recommend buying the pair when closing above the downward trend corridor on the hourly chart with targets of 1.2063 and 1.2097.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.