12.03.202621:32 Forex Analysis & Reviews: EUR/USD. Smart Money. Bears Currently Have The Advantage Over Bulls

The EUR/USD pair is once again at a crossroads, and it seems traders have already made their choice. This week the price reacted to the most recent "bearish" imbalance 11. The reaction was precise, hesitant, and weak, but nevertheless it was a reaction. Thus, a sell signal was obtained. A sell signal within a bullish trend, but still a sell signal. And now, despite two buy-side liquidity sweeps, the European currency has been under pressure for the third consecutive day. Of course, geopolitics is to blame. If the situation in the Middle East had not deteriorated so dramatically, we would most likely have seen a continuation of the bullish trend. But Donald Trump has done everything possible to ensure that this time the U.S. dollar is the one that rises. Let me remind you that there are no particularly strong reasons for the growth of the U.S. currency other than geopolitics. But geopolitics alone is more than enough for traders to massively buy dollars.

In my opinion, without a new escalation of the conflict in the Middle East, it will be difficult for the dollar to continue rising and for the bears to keep advancing, but the last few days have shown that either the escalation has already occurred or the bears are satisfied with the current set of events. The situation in the Middle East is not escalating even further, but it certainly is not improving either. Yesterday it became known that Iran struck several tankers, confirming its intention to continue blocking passage through the Strait of Hormuz. Of course, Donald Trump may now launch new strikes on Iran, but what will that change? American missiles may eliminate Iran's new leader, but the very next day another person with the same anti-American views will take his place.

Last week a "bearish" imbalance 11 was formed, and this week it was worked off. The sell signal appeared quite quickly under pressure from the geopolitical background. Now bulls can only rely on new liquidity sweeps from the last three lows: 1.1508, 1.1470, and 1.1392. But if the geopolitical situation does not improve, even this will not save the bulls.

The graphical picture still continues to signal bullish dominance. The bullish trend remains intact; however, at the moment bullish traders do not have enough reasons for a new offensive. To expect growth in the European currency, the war involving Iran must begin to de-escalate, and the price of oil and gas must continue to decline. To open new buy positions, new bullish patterns are needed or at least liquidity sweeps from the last three bearish swings.

The news background on Thursday was quite limited, and traders have paid almost no attention to economic indicators over the past few weeks.

In recent months bulls have had a huge number of reasons to attack, and even the start of the war in the Middle East has not reduced them. Structurally and globally, Trump's policy, which led to a serious fall in the dollar last year, has not changed. In the near future the U.S. currency may show growth due to investors fleeing risk, but this factor will not be able to support it indefinitely. Meanwhile, the conflict in Iran does not cancel the dovish prospects for FOMC monetary policy, Trump's trade war with the whole world, the weakness of the U.S. labor market, two shutdowns, U.S. military aggression, the criminal prosecution of Powell, the slowdown in GDP growth, and other rather unpleasant developments for America.

I still do not believe in a bearish trend. The dollar has received temporary support from the market, but it is not certain that this situation will persist for a long time. The blue line shows the price level below which the bullish trend could be considered finished. To reach it, bears would need to move downward by about 600 pips, and even if they succeed in this task, I will still doubt the existence of a bearish trend. In my opinion, the pair is showing a strong decline only because of the geopolitical factor. When it stops working, what will bears use to continue their attacks?

News calendar for the United States and the Eurozone:

• Eurozone – Change in industrial production (10:00 UTC).
• United States – Core Personal Consumption Expenditures Price Index (12:30 UTC).
• United States – Change in durable goods orders (12:30 UTC).
• United States – GDP growth rate in the fourth quarter (12:30 UTC).
• United States – Personal income and spending (12:30 UTC).

On March 13, the economic events calendar contains several fairly important entries. However, the market may once again ignore even important reports. The influence of the information background on market sentiment on Friday may be extremely weak.

EUR/USD forecast and trading advice:

In my opinion, the pair remains in the stage of forming a bullish trend. The information background sharply changed the direction of movement two weeks ago, but the trend itself remains intact. Thus, in the near future traders need new patterns and signals to form short-term forecasts. If these are bearish signals (which is more likely), it is important to remember that the trend remains bullish and the geopolitical factor usually does not have a long-term impact. If these are bullish signals (which is much more preferable), traders will have the opportunity to open new buy positions that do not contradict the trend. This week a sell signal was formed, but the proximity of three important swings still makes me doubt the prospects for the bears.