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EUR/USD – 1H.
On February 26, the EUR/USD pair continued the fall of quotes. The closing of the pair's exchange rate under the corrective level of 38.2% (1.2104) allows us to count on a further drop in quotes in the direction of the next Fibo level of 23.6% (1.2046). The fall of the European currency and the growth of the dollar have been going on for two days. The reasons for such strange behavior of traders will be discussed below. First, I would like to point out that the markets have been behaving very strangely lately. Perhaps these are the consequences of the crisis and pandemic, perhaps traders have not yet come to their senses after an extra difficult year, perhaps these are the consequences of trillions of dollars that were supposed to stimulate the economy, as conceived by the Fed and the US Congress. However, the movements in the currency and stock markets in recent months are quite strange, not to mention the cryptocurrency market, in which there are outright frenzies. Secondly, the yield on long-term US Treasury bonds has recently started to rise. And this is a factor that can support the demand for the US dollar since, to buy bonds, you need to have dollars on hand, not euros or other money. Third, another escalation of the conflict in the Middle East increases the demand for the dollar. However, all these factors are short-term, although extremely important and undoubtedly affect the mood of traders. That is, so far, the dollar has grown strongly over the past two trading days, however, it is unlikely that the same strong movement will continue for at least a few more days. The fall in the pair's quotes was almost impossible to predict, as was the attack of the US Air Force on Syrian targets. As the growth of Treasury yields. Thus, traders should understand that the exchange rate of any currency pair can be influenced by many factors.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the US currency and began the process of returning to the corrective level of 161.8% (1.2027). The rebound of the pair's rate from this level will allow traders to count on a reversal in favor of the European currency and some growth in the direction of the level of 1.2223. Closing the pair's rate under the 161.8% Fibo level will increase the probability of a further fall in the direction of the next corrective level of 127.2% (1.1729).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed the third breakdown of the lower border of the upward trend corridor. If this time the breakdown is not false, then the fall in quotes will continue in the direction of the corrective level of 261.8% (1.1822).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On February 26, there were no interesting events in the European Union, and the statistics from the United States were overshadowed by other more important events.
News calendar for the United States and the European Union:
EU - index of business activity in the manufacturing sector (09:00 GMT).
US - index of business activity in the manufacturing sector(14:45 GMT).
US - ISM manufacturing index (15:00 GMT).
EU - ECB President Christine Lagarde will deliver a speech (16:10 GMT).
On March 1, the European Union will host a speech by Christine Lagarde. Also on this day, the indices of business activity in the areas of production in the US and the EU will be released.
COT (Commitments of Traders) report:
Last Friday, the next COT report was released and for the third week in a row, it turns out to be very calm. There are no major changes in the mood of traders. The most important category of Non-commercial traders opened 6.5 thousand long and 6.6 thousand short contracts. The "Commercial" category of traders opened 15 thousand long and 17 thousand short contracts. That is, in general, during the reporting week, the major players made purchases and sales in equal proportions. In the long term, the euro continues to show growth, and the number of long contracts focused on the hands of speculators exceeds the number of short contracts by three times. Therefore, to break the upward trend, it is necessary that speculators massively open sales, which is not yet observed.
Forecast for EUR/USD and recommendations for traders:
Sales of the pair are recommended when closing quotes under the Fibo level of 23.6% (1.2046) on the hourly chart with a target of 1.1952. You can even try to open sales right now with a protective order above the level of 38.2% (1.2104). New purchases of the pair are recommended when closing quotes above the level of 1.2104 on the hourly chart with targets of 1.2151 and 1.2197.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
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