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During Thursday, the EUR/USD pair returned to the 76.4% Fibonacci retracement level at 1.1696. Thus, a rebound from this level today would favor the U.S. dollar and a slight decline toward the 100.0% Fibonacci level at 1.1577. A consolidation above 1.1696 would increase the likelihood of continued growth toward the next retracement level of 61.8% at 1.1770.
The wave structure on the hourly chart has become quite complex but is starting to clarify. All recent waves have formed within roughly the same price range and are similar in size. Recent news of a two-week ceasefire between Iran and the U.S. supported the bulls, allowing them to form a new "bullish" wave. The picture now resembles the beginning of a new bullish trend. However, geopolitics is not stable, and the bulls' advance depends entirely on it.
On Thursday, the news background can be divided into two parts: geopolitics and economics. There was little geopolitical news, aside from reports that the blockade of the Strait of Hormuz remains in place. Economic news was also limited, and traders once again showed little interest in this data. Today, the U.S. will release its March inflation report, which is of great importance. Recall that the Federal Reserve has outlined its near-term monetary policy objective: to prevent inflation from getting out of control. In March, U.S. inflation may accelerate to 3.3% year-over-year, which could push the FOMC toward a more "hawkish" stance. At present, the regulator is not considering raising interest rates, but the situation could change if inflation rises faster than expected and for longer than anticipated. This will depend on the duration of the conflict in the Middle East (which cannot yet be considered over) and on final prices for oil and other energy resources.
On the 4-hour chart, the pair rose to the 61.8% retracement level at 1.1706. A rebound from this level would favor the U.S. dollar and a decline toward the 76.4% Fibonacci level at 1.1617. However, bulls previously managed to break above the descending trend channel, and the news background has sharply shifted in their favor. Thus, a consolidation above 1.1706 appears more likely, followed by further growth toward 1.1778 and 1.1849. No emerging divergences are observed on any indicators.
Commitments of Traders (COT) Report:
Over the latest reporting week, professional traders opened 143 long positions and 8,915 short positions. Thus, over seven weeks, the bulls' total 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, the bulls' advantage among non-commercial traders was more than double.
Overall, in the long term, major players remain interested 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 war continues to escalate and expand geographically. Therefore, in the near term, the euro and dollar exchange rate will depend not on Federal Reserve or ECB monetary policy or economic data, but on the war in Iran. So far, the dollar is benefiting the most from this situation.
News Calendar for the U.S. and the Eurozone:
On April 10, the economic calendar contains three entries, with U.S. inflation standing out as the key event. The impact of the news background on market sentiment on Friday may be strong in the second half of the day.
EUR/USD Forecast and Trading Tips:
Selling opportunities were available after a rebound from 1.1696 on the hourly chart with a target of 1.1577. I had recommended buying positions after a consolidation above 1.1577 with a target of 1.1696, which has been reached. New buying opportunities may arise after a close 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.
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