26.03.202605:03 Forex Analysis & Reviews: Overview of the EUR/USD Pair. March 26. Trump Negotiates. By Himself

The EUR/USD currency pair traded relatively calmly on Wednesday amid a complete lack of significant macroeconomic and fundamental events, as well as only geopolitical rumors. In terms of fundamentals and macroeconomics, such market behavior does not surprise us at all. For over a month, traders have been reacting only to geopolitical events. Otherwise, the dollar would merrily plunge into the abyss again. It is worth recalling that nearly all recent reports from across the ocean have been disappointing, yet the dollar remains in demand as a "safe haven." It should also be noted that the ECB and the Bank of England have demonstrated their readiness to raise key rates at the next meeting in response to a likely acceleration in inflation, while the Fed has only postponed further easing indefinitely. Thus, almost all factors, except for geopolitics, are sharply against the dollar.

However, the dollar remains relatively expensive because the situation in the Middle East remains unresolved. A massive number of rumors and insider reports are circulating, indicating completely opposite developments. Some suggest active preparations for negotiations, while others point to a new escalation of military actions. Who should one believe? The market no longer trusts anyone. If on Monday Donald Trump openly stated that he was having productive talks with Iran, and just half an hour later Tehran bewilderingly rejected the idea of any negotiations, then what insider information can traders trust?

It should be understood that most so-called insiders are merely newspaper hoaxes intended to increase traffic to a particular resource or boost sales of certain publications. Quite simply, these are standard journalistic tactics to attract attention to their own articles and profit from it. Typically, the source of the insider is not even disclosed. That's why it's called an insider! Therefore, any journalist can say anything, citing "their own sources." The truthfulness of such statements and news can currently be assessed. Iran's official position is that no negotiations are underway at this time and, moreover, that they are pointless.

According to rumors, Donald Trump, through Pakistan, proposed a 15-point agreement to Tehran, the contents of which are unknown. One can only speculate that it concerns the easing of sanctions and the negotiation of Iran's nuclear program. At the same time, the US has begun redeploying ground troops to the Middle East, likely in the event negotiations fail. However, how can negotiations fail if they are not even taking place? All of this resembles that Trump is actively pretending to want to end the war or simply does not know how to do it, and therefore is willing to take any measures. A far more likely scenario is not negotiations, but further escalation. Iran continues to stand firm—no one dares to dictate what Tehran should do. Until Washington accepts this position of a sovereign state, any negotiations are impossible by definition.

The average volatility of the EUR/USD currency pair over the last five trading days as of March 26 is 109 pips and is characterized as "high." We expect the pair to trade between 1.1461 and 1.1679 on Thursday. The upper linear regression channel has turned downward, indicating a change in trend. The CCI indicator has entered the oversold area and formed a "bullish" divergence, which once again warns of the conclusion of the downward trend.

Nearest support levels:

S1 – 1.1475

S2 – 1.1353

S3 – 1.1230

Nearest resistance levels:

R1 – 1.1597

R2 – 1.1719

R3 – 1.1841

Trading Recommendations:

The EUR/USD pair continues to correct and has a chance of recovery. The global fundamental background remains extremely negative for the dollar. However, for over a month, the market has been focusing solely on geopolitics, rendering all other factors almost irrelevant. If the price is below the moving average, short positions can be considered with targets of 1.1475 and 1.1353. Above the moving average line, long positions remain relevant, with targets at 1.1963 and 1.2085, but for such a move to occur, the geopolitical backdrop needs to improve somewhat.

Explanations for Illustrations:

Linear regression channels help determine the current trend. If both are pointing in the same direction, it means the trend is currently strong;

The moving average line (settings 20,0, smoothed) defines the short-term trend and the direction in which trading should currently be conducted;

Murray levels are target levels for movements and corrections;

Volatility levels (red lines) represent the likely price channel in which the pair will spend the next 24 hours based on current volatility metrics;

The CCI indicator—its entry into the oversold area (below -250) or into the overbought area (above +250) indicates that a trend reversal in the opposite direction is imminent.