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04.03.202620:55 Forex Analysis & Reviews: EUR/USD. Smart Money. The Market Has Stabilized, and the Euro Is Under Conflicting Pressures

Relevance up to 10:00 UTC--5

During the first two days of the week, the EUR/USD pair was declining, but on Wednesday dollar buying eased somewhat. We have already seen the market's initial reaction to developments in the Middle East, and it was hardly encouraging. The bullish picture for EUR/USD has either been seriously damaged or significantly altered. We witnessed a clear confrontation between the technical setup and the news background — and this time, the news prevailed.

Under current conditions, traders need to exercise caution, as the pair's decline was driven solely by geopolitical news from the Middle East. I do not expect this backdrop to reverse anytime soon. However, if the Federal Reserve decides to cut rates, the dollar would not keep falling for the entire six weeks until the next meeting. In other words, it is possible that we have already seen the full market reaction to the war in Iran.

Exchange Rates 04.03.2026 analysis

This week, as expected, a bearish imbalance 11 was formed. However, the overall trend remains bullish, and yesterday concluded with liquidity taken from the January 19 swing. It should be noted that liquidity taking is not a pattern for opening positions; it serves only as a warning of a potential shift in market sentiment. Traders now face a choice: either wait for a bearish signal within the bullish trend, wait for a break of the bullish trend and then trade bearish patterns, or wait for new bullish patterns.

For now, the technical picture continues to indicate bullish dominance. The bullish trend remains intact, although the bullish scenario has been postponed indefinitely. To resume expectations for euro growth, new bullish patterns are required.

On Wednesday, the news background was once again largely ignored by traders. There may have been minor reactions to European and U.S. reports, but currently all economic data are filtered through the lens of geopolitics. In my view, the market itself now needs to decide which direction it intends to move next. Are bears prepared to continue their pressure if the dollar has little more to offer than its "safe haven" status?

In recent months, bulls have had numerous reasons to push higher, and even the outbreak of war in the Middle East has not eliminated them. Structurally and globally, Trump's policies — which led to a significant dollar decline last year — have not changed. In the short term, the U.S. currency may strengthen amid risk aversion, but this factor is unlikely to support it for long. Meanwhile, dovish FOMC monetary policy prospects, Trump's trade war with much of the world, weakness in the U.S. labor market, two government shutdowns, U.S. military actions, legal pressure on Powell, slowing GDP growth, and other unfavorable developments for the United States are not negated by the conflict in Iran.

I still do not believe in a sustained bearish trend. The dollar has received temporary support, but it is far from certain that this situation will persist for long. The blue line marks the price level below which the bullish trend could be considered completed. Bears still need to push the pair down about 140 points to reach that level. Even if they succeed, I would still question the durability of a bearish trend. In my view, the pair is showing a sharp decline solely due to geopolitics. Once that factor fades, what will drive further bearish pressure? Bearish patterns may form this week, which would make it easier to analyze the local picture and build forecasts.

News Calendar for the United States and the European Union:

  • European Union – Retail Sales Change (10:00 UTC)
  • United States – Initial Jobless Claims (13:30 UTC)
  • European Union – Speech by ECB President Christine Lagarde (17:00 UTC)

On March 5, the economic calendar includes three notable entries, but once again the economy may remain overshadowed by geopolitics. The news background may influence market sentiment on Thursday, but technical analysis is now taking the leading role.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the process of forming a bullish trend. The news background shifted sharply last weekend, but the trend itself remains intact. Therefore, traders need new patterns and signals to build short-term forecasts. If bearish signals appear (which seems more likely), it is important to remember that the broader trend is still bullish and that geopolitical factors usually do not have a long-term impact. If bullish signals emerge (which would be preferable), traders will have opportunities to open new long positions that align with the prevailing trend.

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

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