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The wave structure on the hourly chart has taken on a rather complex appearance. All recent waves have formed within roughly the same price range and are similar in size. Thus, it is currently easiest to conclude that a sideways market is present. In my view, this is not truly a sideways market. Rather, these are unreadable movements formed as a result of constantly changing geopolitical conditions. At the moment, traders do not understand what to expect next in the Middle East.
On Monday, the news background gave bulls a chance to continue the morning rally in the second half of the day, but, as has often been the case in recent weeks, economic reports did not interest traders. The US ISM Manufacturing PMI came in weaker than both expectations and February's reading, which could have triggered further growth of the pair toward 1.1577 and higher. However, traders preferred to continue waiting for a decision from Donald Trump, who could have authorized a new missile strike on Iran as early as yesterday, but instead postponed the decision until today. In my view, these constant delays change very little, as Iran does not intend to comply with Trump's demands or follow US directives. One may have different opinions about both Iran and the United States, but the conflict in the Middle East was provoked by Trump. Now, the US president appears unsure how to achieve his objectives and continues to threaten new bombings of Iranian territory. If the conflict escalates (and the probability is very high), oil prices will continue to rise, and traders may return to buying the US dollar.
On the 4-hour chart, the pair rose to the 100.0% corrective level at 1.1474, rebounded from it, and reversed in favor of the US dollar. Thus, the downward movement may continue toward the same Fibonacci level of 1.1474. Earlier, the pair closed above a descending trend channel, which slightly improves the outlook for bulls compared to bears. However, geopolitics remains the decisive factor. 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 seven weeks, the bulls' total advantage has disappeared. The total number of long positions held by speculators is now 200,000, while short positions amount to 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 view the euro with considerable interest. Undoubtedly, global events—of which there has been no shortage in recent years—affect investor sentiment. In particular, all market attention is now focused on the Middle East, where the war continues to intensify and expand geographically. Therefore, in the near future, the euro and dollar exchange rate will depend not on the monetary policy of the Federal Reserve or the European Central Bank, nor on economic data, but on the war in Iran. For now, the dollar is extracting maximum benefit from this situation.
Economic Calendar for the US and the Eurozone:
On April 7, the economic calendar contains one fairly important entry. The impact of the news background on market sentiment on Tuesday may be seen in the second half of the day—unless traders ignore this report as well.
EUR/USD Forecast and Trading Tips:
Selling the pair was possible after a close below the 1.1577 level on the hourly chart, with a target of 1.1440. These positions can still be held. Buy positions will become possible after consolidation above the 1.1577 level, with a target of 1.1696.
Fibonacci levels are plotted from 1.1577–1.2082 on the hourly chart and from 1.1474–1.2082 on the 4-hour chart.
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