EUR/USD – 1H.
On March 2, the EUR/USD pair performed a reversal in favor of the European currency and began the growth process in the direction of the corrective level of 38.2% (1.2104). A rebound of the pair's rate from this level will work in favor of the US currency and a certain drop in quotes in the direction of the corrective level of 23.6% (1.2046). Closing quotes above the level of 38.2% will increase the probability of continuing growth in the direction of the next Fibo level of 50.0% (1.2151). As for the information background, there was almost no news interesting to traders on Tuesday. It seems that at the end of last week, traders began to actively buy the dollar based on strong statistics from the United States, as well as due to the growth in the yield of American treasuries.
However, in reality, not everything is as obvious as it seems. First, I would like to draw attention to the fact that in the last year, traders do not always pay even minimal attention to the published reports. Thus, it is impossible to say unequivocally that the growth of the dollar was caused by statistics from America. Secondly, the growth in the yield of government securities in the United States has been going on for more than a month. In principle, it has been growing for several months, and the US dollar showed strong growth only for a short period. Third, the EU inflation report was released yesterday, according to which the main inflation remained unchanged at 0.9% y/y, while the base inflation decreased to 1.1% y/y. That is, traders should have responded with new sales of the euro currency to this report, but instead, the markets began to buy euros, which does not correspond to the nature of the report. Thus, I tend to believe that the growth of the US dollar by 250 points is a simple accident, the result of a combination of several factors. However, it will be extremely difficult to continue the growth of the US currency.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes fell to the corrective level of 161.8% (1.2027) and rebounded from it. Thus, a reversal was made in favor of the euro currency and the growth process began in the direction of the level of 1.2223. The consolidation of quotes under the Fibo level of 161.8% (1.2027) will work in favor of the US dollar and the resumption of the pair's fall in the direction of the next corrective level of 127.2% (1.1729).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed the third breakdown of the lower border of the upward trend corridor, and this time it does not look false. Thus, the fall in quotes can be continued in the direction of the corrective level of 261.8% (1.1822). The descending trend line characterizes the 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 2, the calendar of economic events in the United States was empty, and the report on European inflation did not attract the attention of traders.
News calendar for the United States and the European Union:
EU - index of business activity in the service sector (09:00 GMT).
US - change in the number of employees from ADP (13:15 GMT).
US - ISM composite index for the non-manufacturing sector (15:00 GMT).
On March 3, the European Union and the United States will release indices of business activity in the service sectors, and in the United States – also a report on the change in the number of employees from ADP. The greatest interest among traders should be caused by the American reports.
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.
Forecast for EUR/USD and recommendations for traders:
The pair was recommended to sell at the close of quotes under the Fibo level of 23.6% (1.2046) on the hourly chart with a target of 1.1952. This level was not reached. It is recommended to sell the pair when the quotes break from the level of 1.2104 with a target of 1.2046 on the hourly chart. New purchases of the pair are recommended when closing above the level of 1.2104 on the hourly chart with a target of 1.2151.
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.
The material has been provided by InstaForex Company - www.instaforex.com