Hi, dear traders! The euro/dollar pair maintains its Friday's downward movement. It settled below 1.1070, which was the Fibonacci correction level of 38.2%. After that, the price tumbled even more. Today, it approached 1.0970, the Fibo level of 23.6%. Notably, the 1.0970 level is quite important. A week earlier, the bears failed to push the pair below this level three or four times. The pair may try to break through this level today or tomorrow. A rebound from this level may help the euro slightly recover and rise to 1.1070. If it closes below this level, it will increase the probability of a further fall to 1,0808, the Fibonacci correction level of 0.0%. The euro has kicked off a new week on a pessimistic note. As I have mentioned many times, geopolitical news remains in the limelight. They mainly influence market sentiment. Apart from that, traders take into account other fundamental factors such as new sanctions against Russia. What happened on Friday, Saturday, and Sunday that the pair started falling immediately after the start of the new week? At first glance, there were no reasons for its drop.
Ukraine's deputy defense minister said the Kyiv region was "liberated" from Russian forces. Military actions in other regions are carried out without changes. According to US and UK intelligence, the Kremlin will now focus attention on eastern Ukraine, namely the Donetsk and Luhansk regions. They point out that Moscow may revise its plans as it is facing certain difficulties. They even doubt that the Russian forces could capture Kyiv. Some analysts suppose that Russia is lacking the necessary recourses to proceed with the military operation. Therefore, the Kremlin ordered the deployment of troops from the North of Ukraine to the East to try to take control of the Donetsk and Luhansk regions. Meanwhile, Moscow said that its position on the DR, the LPR, and Crimea is unchanged. Of course, Kyiv is also unwilling to make concessions. This is why the parties are unlikely to reach a peace agreement in the near future.
On the 4H chart, the euro/dollar pair performed a rebound from 1.1148, the Fibonacci correction level of 161.8%. It may also decline to 1.0865, the Fibo level of 200.0%. There are no divergences today. The consolidation of the pair above the level of 161.8% will boost its further growth. If this scenario comes true, it may advance to 1.1404, the next Fibo level of 127.2%
Commitments of Traders (COT):
Last week, speculators closed 7,008 Long contracts and 4,539 Short contracts. It means that the bullish sentiment of the major market players has weakened slightly. However, changes have remained insignificant for the second week in a row. The total number of Long contracts in the hands of traders is now 200,000. The number of Short contracts amounts to 178,000. Thus, the mood of the "Non-commercial" category of traders is more bullish. In this scenario, the euro is expected to grow in the near future. It could have risen already but fundamental factors are more favorable to the US dollar. We are now witnessing a situation when the bullish mood of major market players is strong but the currency is falling. Thus, geopolitics news continues to affect the euro as it remains in the spotlight. If the situation in Ukraine worsens, the euro may nosedive even more.
Macroeconomic calendar for the US and the EU
The economic calendar for the US and the EU on April 4 is empty. This is why market sentiment will be unaffected by fundamental factors.
Outlook for EUR/USD and trading recommendations:
It is better to open short positions if the price reaches 1.0970 on the 1H chart. It is recommended to proceed with selling if the price drops below 1.0970 with a downward target of 1.0808. It is better to open long positions if the price rebounds from the 1.0970 level on the 1H chart with upward targets of 1.1070 and 1.1150.