The EUR/USD pair continued its upward movement on Tuesday, first consolidating above the 100.0% Fibonacci level at 1.1577, and then reaching the 76.4% level at 1.1696. A rebound from the 1.1696 level on Wednesday would favor the US dollar and lead to some decline toward the 100.0% corrective level at 1.1577. A breakout above 1.1696 would increase the likelihood of further growth toward the next Fibonacci level of 61.8% at 1.1770.
The wave situation on the hourly chart has taken on a rather complex form. All recent waves have been formed within roughly the same price range and are similar in size. Nevertheless, the latest news of a two-week ceasefire between Iran and the United States supported the bulls, allowing them to form a new bullish wave. The picture now looks like the beginning of a new bullish trend.
On Tuesday, standard economic reports once again failed to attract traders' attention. The only notable report—February durable goods orders—was calmly ignored. Just like Monday's data, and Friday's as well. Orders declined by 1.4% year-over-year versus expectations of -0.5%, but the dollar's decline during the day was not driven by this report. By evening, the market was almost preparing for a nuclear scenario, as aggressive rhetoric from both sides continued to escalate. However, overnight, Donald Trump unexpectedly announced that negotiations with Iran were progressing productively, and therefore he would suspend bombings for two weeks. During this period, both sides will engage in active negotiations and attempt to reach a deal. Iran confirmed that missile strikes would cease for two weeks, and the Strait of Hormuz would be reopened during this time, though it would remain under Tehran's control. As a result, demand for the safe-haven US dollar sharply declined, and bulls launched a natural offensive. Over the next two weeks, bulls may hold the advantage in the market. The time of the bears appears to have come to an end.
On the 4-hour chart, the pair rose to the 61.8% Fibonacci level at 1.1706. A rebound from this level would favor the US dollar and lead to a decline toward the 76.4% level at 1.1617. However, bulls previously managed to break above a descending trend channel, and the fundamental backdrop has sharply shifted in their favor. Thus, a breakout above 1.1706 and further growth toward 1.1778 and 1.1849 appears more likely. No emerging divergences are observed on any indicators.
Commitments of Traders (COT) Report:
During the last reporting week, professional traders opened 143 long positions and 8,915 short positions. Thus, over the past seven weeks, the bulls' overwhelming advantage has disappeared. The total number of long positions held by speculators now stands at 200,000, while short positions total 199,000. Two months ago, bulls had more than a twofold advantage among non-commercial traders.
Overall, in the long term, large players continue to show strong interest in the euro. Of course, global events—of which there has been no shortage in recent years—continue to influence investor sentiment. In particular, the market's focus is now on the Middle East, where the conflict continues to escalate and expand geographically. Thus, in the near term, the euro and the dollar will depend not on the monetary policies of the Federal Reserve or the ECB, nor on economic data, but on the conflict involving Iran. For now, the dollar has been extracting maximum benefit from this situation.
Economic Calendar for the US and the Eurozone:
- Eurozone – Change in Retail Sales (09:00 UTC).
- US – FOMC Minutes (18:00 UTC).
On April 8, the economic calendar contains two relatively minor entries. The impact of the news background on market sentiment on Wednesday is expected to be weak.
EUR/USD Forecast and Trading Tips:
Selling the pair is possible today if there is a rebound from the 1.1696 level on the hourly chart, with a target of 1.1577. Buying opportunities were available upon consolidation above 1.1577 with a target of 1.1696—this target has been reached. New buying opportunities may arise upon a breakout above 1.1696, with a target of 1.1770.
Fibonacci retracement levels are drawn from 1.1577 to 1.2082 on the hourly chart and from 1.1474 to 1.2082 on the 4-hour chart.
