The EUR/USD pair performed a slight drop on Friday but remained between the levels of 1.0926 and 1.1050. The fall in quotes did not last long and today a reversal was made in favor of the European currency and a new growth process was started in the direction of the 1.1050 level. In general, the activity of traders has dropped significantly over the past week, as has their desire to trade in a certain direction. For me, this is not surprising, because, after periods of strong trends, periods of rest or consolidation inevitably begin. It seems that one of these periods has just begun. I still believe that the geopolitical factor is fundamental for traders. Since there is not much news from Ukraine right now, the traders decided to take a break for a while.
Is the lack of news from Ukraine a good thing or a bad thing? It is probably good for the foreign exchange market since in recent months the euro and the pound have seriously sunk in price. However, let me remind you that both currencies have been falling for more than a year, and the military conflict between Ukraine and Russia is an unexpected factor for many traders since few people expected that something like what we are seeing now would begin between these countries. At the moment, possible options for the development of this conflict are being discussed. There is a lot of information, but there is practically no important and official information. It all boils down to the fact that sanctions against the Russian Federation continue to tighten, and many economists argue that in the near future, Russia will begin to feel the consequences of these sanctions. However, euro and pound traders are not too interested in what is there in Russia. They are interested in what is there in Europe. As I have already said, Europe may face a serious food crisis, as oil and gas prices continue to rise, and Washington is putting pressure on Brussels to terminate all contracts for the supply of hydrocarbons from Russia as soon as possible. In turn, Moscow is also trying to respond to these sanctions, but it can only push through its interests in Ukraine since it has few levers of pressure on the West.
On the 4-hour chart, the pair continues the process of a slow decline in the direction of the corrective level of 200.0% (1.0865) after the formation of a bearish divergence at the CCI indicator. The rebound of quotes from the level of 1.0865 will work in favor of the EU currency and some growth. The consolidation of quotes below the level of 1.0865 will increase the likelihood of a further fall in the direction of the level of 1.0638.
Commitments of Traders (COT) Report:
Last reporting week, speculators opened 5,011 long contracts and closed 38 short contracts. This means that the bullish mood of the major players has slightly increased, but the changes are generally insignificant. The total number of long contracts concentrated on their hands is now 207 thousand, and short contracts – 183 thousand. Thus, in general, the mood of the "Non-commercial" category of traders is still characterized as "bullish". This would give an excellent opportunity for the European currency to count on growth, if not for the information background, which now supports only the dollar. We are now witnessing a situation where the bullish mood of the major players persists, but the currency itself is falling. Thus, geopolitics is now a priority and the worse things get in Ukraine, the more the euro currency may fall.
News calendar for the USA and the European Union:
On March 28, the calendars of economic events of the European Union and the United States do not contain a single interesting entry. I believe that today the information background will not affect the mood of traders.
EUR/USD forecast and recommendations to traders:
I recommended new sales of the pair with a target of 1.0926 on the hourly chart if a close is made under the trend line. Now, these trades can be kept open until they are fixed above 1.1050. I recommend buying a pair if there is a rebound from the 1.0865 level on a 4-hour chart with targets of 1.0926 and 1.1050.