Hello, dear traders! On Thursday, the EUR/USD pair continued its decline, which started several days ago. No significant statistics were released tonight and this morning. Besides, despite the lack of strong geopolitical factors (Ukraine's issue is still complicated), traders continued selling the euro. Consequently, the pair fell to 1.0926. Moreover, the US Nonfarm payrolls report will be released today. This report may have a strong impact on traders' sentiment. However, I do not know the actual figures yet. The rebound of the quotes from 1.0926 may support the European currency and stimulate its growth towards 1.1050. If the US Nonfarm payrolls report is weak, two factors may favour the euro's growth on Friday afternoon.
Moreover, Jerome Powell's speech was not significant for the dollar. The Fed president said twice that his office would not rush to raise the interest rate despite the fact that US inflation continues to accelerate. Therefore, his tone was not as hawkish as traders might have expected. However, the dollar continues to rise. Powell also noted that Ukraine's issue posed additional risks for both the global and the US economies. Therefore, the Fed will have to calculate these risks when formulating monetary policy. Thus, while addressing the subject of the Fed and Jerome Powell, Ukraine's geopolitical tensions are indicated. Taking these facts into account, I believe that geopolitics will continue to significantly affect traders' sentiment for the next few weeks or even longer.
On the 4-hour chart, the pair consolidated below the sideways corridor. Therefore, a new decline towards the next correction level of 200.0% at 1.0865 is likely. The bullish divergence, formed yesterday, was cancelled. There are no emerging divergences on the current chart. So far, I cannot give any reasons for the pair's growth except the payrolls report.
COT report:
Speculators closed 5,515 long contracts and 1,739 short contracts during last reporting week. This fact indicates that the bullish sentiment has increased. The total number of long contracts held by speculators currently is 217,000, while the number of short contracts amounts to 158,000. Thus, non-commercial traders' sentiment is also considered bullish. This aspect provides a chance for the European currency to grow. However, the current news background is more favourable to the US currency. I think that the COT report data is insignificant now as the global geopolitical situation is tense and the sentiment of major players can change drastically.
US and the EU economic news calendar:
EU - Change in volume of retail sales(10-00 UTC).
US - Unemployment rate (13-30 UTC).
US - Changes in Nonfarm payrolls (13-30 UTC).
US - Changes in average hourly earnings (13-30 UTC).
On March 4, the EU economic calendar contains one report released in the morning. Retail sales for January were stronger. However, they did not increase as much as traders had expected. Moreover, the most significant US reports will be released today. They may have a profound impact on traders' sentiment.
EUR/USD outlook and recommendations to traders:
I recommended selling the pair with the targets of 1.0926 and 1.0850 if the closing below the sideways corridor is performed on the 4-hour chart. It was possible to achieve the first target. Currently, the US Nonfarm payrolls report may affect traders's sentiment. I recommend buying the pair if the rebound from 1.0926 with the target 1.1050 is carried out on the hourly chart .
