Euro keeps moving lower, bears still strong
Key highlights:
- Ongoing Downtrend: EUR/USD sustains a bearish trend, breaching crucial support at 1.0825, with a new low at 1.0777, signaling continued downward pressure.
- Critical Levels: Potential support at 1.0770 and a temporary support in the H4 demand zone (1.0770 - 1.0746) indicate key levels to watch, despite oversold conditions.
- Bullish Signal: A breakout above 1.0966 is crucial for a potential shift to a more bullish stance, with weekly pivot points and Fibonacci retracement levels providing significant markers.
During the last few sessions, there was a significant reshuffle of forces on EUR/USD. A few days were enough for the price to retreat by approximately 2%, which indicates a high dynamics of depreciation.
The PMI services data for the euro zone published in the morning were better than expected, which may give an impulse to the euro's growth. But this is not happening, which can be explained by concerns about the scale of rate cuts by the ECB, which were boosted by low inflation readings last week.
Weak rebound of EUR/USD
Today, the agencies quote the previously "hawkish" Isabelle Schnabel from the ECB, who believes that the inflation data makes it unnecessary to discuss further rate increases. In recent days, there has been a significant shift down the market expectations curve.
Next year, interest rates in the euro zone may fall by up to 150 basis points. up to 2.50 percent, and the first move may take place as early as March 7.
Technical Market Outlook:
The EUR/USD pair had been continuing to move lower, so bears made a new local low at the level of 1.0777. The next target for bears is seen at the level of 1.0770. The last biggest bounce had been capped at the supply zone seen between the levels of 1.0828 - 1.0852, since then all the bounces are shallower. The weak and negative momentum on the H4 time frame supports the bearish outlook for EUR. Please notice, that despite the recent efforts, the market participants keep trading inside the bearish zone, the level of 1.0852 is still unreachable for them, and they need to break above the level of 1.0852 to enter the bullish zone. Despite the extremely oversold market conditions, still all of the shallow bullish bounces are still being faded by bears.Weekly Pivot Points:
Pivot Points, crucial in technical analysis, serve to identify potential trend reversals, support, and resistance levels.
WR3: 1.1179
WR2: 1.1098
WR1: 1.0991
Weekly Pivot: 1.0910
WS1: 1.0803
WS2: 1.0722
WS3: 1.0615
Trading Outlook:
A breakout above the 61% Fibonacci retracement (1.0963) of the recent weekly downtrend signals a potential long-term trend reversal favoring the Euro. A weekly close beyond this level serves as the initial signal for this shift.
EUR/USD Intraday Indicator Analysis on H1 time frame chart:
-Out of 22 technical indicators, 7 display a Strong Sell signal, 9 are Neutral, and 7 indicates a Buy signal.
- Out of 18 moving averages, 9 display a Strong Sell signal and 9 display a Strong Buy signal EUR/USD
Sentiment Scoreboard:
The overall sentiment leans bullish (62% bulls vs.. 38% bears). Last week's sentiment also remained bullish (57% bulls vs.. 43% bears), with the sentiment over the last three days aligning as bullish as well (52% bulls vs.. 48% bears).
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Important:
The beginners in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focuses and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.
