EUR/USD: plan for the European session on April 5. COT reports. Euro remains in a narrow horizontal channel after Easter holidays. Bears aim to surpass 1.1753

To open long positions on EUR/USD, you need:

The closure of a number of European exchanges in connection with Good Friday resulted in low market volatility and only a slight surge was observed during the US session, after the labor market report was released. Let's take a look at the 5 minute chart and talk about what signals were generated. We can see that after the bears failed to fall below support at 1.1753, a false breakout was formed, which resulted in creating a good entry point into long positions. However, one could hardly count on the euro's active growth at the end of the week. All that could be taken from the market was 15 points. Today the situation may repeat itself.

As the EU celebrates Easter Monday, many European markets will be closed again, and volatility and trading volume will still be at their lowest in the morning. In this regard, in order to prevent false entry points from forming, it is best to rely on Friday's levels. Bulls still need to settle above the 1.1791 range: testing this level from top to bottom creates a signal to open long positions in order to continue the euro's upward correction, in the area of a high like 1.1842, where I recommend taking profits. The next target will be the 1.1889 area, but we are unlikely to reach it today. In case the pair falls in the first half of the day, the bulls need to think of a way to protect support at 1.1753. Forming a false breakout there (by analogy with the deal that I analyzed above) will result in creating a good entry point to buy the euro. If the bulls are not active in the 1.1756 area, then it is best to postpone long positions until a new local low like 1.1715 has been tested, from where you can open long positions immediately on a rebound, counting on an upward correction of 15-20 points within the day.

To open short positions on EUR/USD, you need:

Sellers will look to a good report from the ISM US Services PMI in the afternoon. Therefore, I will not be surprised if they make another attempt to surpass and settle below 1.1753. Being able to settle below this range and a test from the bottom up will create an excellent signal to open new short positions, and the nearest target will be the lower border of the horizontal channel at 1.1715, where I recommend taking profits. In the EUR/USD growth scenario in the first half of the day, forming a false breakout in the 1.1791 area will result in creating a good entry point to short positions in hopes of reaching to the middle of the 1.1753 horizontal channel, below which it was not possible to surpass the area last Friday. If bears are not active at 1.1791 and we receive a disappointing report from ISM - I recommend not to rush to short positions, but to sell EUR/USD to rebound off the next major resistance at 1.1842, counting on a downward correction of 15-20 points within the day.

The Commitment of Traders (COT) report for March 23 shows that the indicators of long and short positions remained practically unchanged, which indicates a clear lack of willingness to buy euros in the short term. The delta growth was due to a slight decline in short positions, and not because of an influx of new buyers. Traders are now entirely focused on the problems with the EU vaccination program and bureaucratic delays in the implementation of the Recovery Fund - they will be the main reason for the weak growth of the eurozone economy after the Covid-19 pandemic this year, making it lag behind other developed countries. This is reflected in the euro's rate, which continues to lose its positions against the US dollar. For this reason, the market remains on the side of sellers of risky assets, which may lead to forming a succeeding downward trend.

The dollar's position will only strengthen in the event of another round of growth in the yield of ten-year US bonds. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. At the moment, it is best not to rush into buying euros, but to wait for lower prices. Another factor of medium-term pressure on the euro is the fact that many European countries are in quarantine due to the coronavirus. The recent rollback of social distancing measures has led to new outbreaks of disease in the population, forcing many governments to revert to previous measures. One can expect an improvement in the economic outlook for the eurozone only when restrictions are lifted and the service sector is restored, which will return the medium-term trend of strengthening EUR/USD. The COT report indicated that long non-commercial positions fell to 195,500 from 195,857, while short non-commercial positions fell further from 105,881 to 102,178. As a result, the total non-commercial net position broke its five-week downward trend and slightly rose from 89,976 to 93,332. The weekly closing price was 1.1932 against 1.1926 a week earlier.

Indicator signals:

Moving averages

Trading is carried out above 30 and 50 moving averages, which indicates the sideways nature of the market.

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

Volatility is low, which does not provide indicator-based entry points to the market.

Description of indicators