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The EUR/USD pair continued its upward movement throughout Wednesday—until another speech by Donald Trump took place, which will be discussed below. Overnight, the pair reversed in favor of the U.S. dollar and consolidated below the 100.0% corrective level at 1.1577. Thus, the downward movement may continue toward the Fibonacci level of 127.2% at 1.1440. A consolidation above 1.1577 would once again favor the euro and a resumption of growth toward the 76.4% corrective level at 1.1696.
The wave situation on the hourly chart is becoming quite complex. All recent waves have formed within roughly the same price range and are similar in size. Therefore, one might conclude that the market is in a sideways trend. In my opinion, this is not a sideways market. Rather, these are completely erratic movements formed as a result of constantly changing geopolitical conditions. At the moment, traders simply do not understand what to expect next in the Middle East.
On Wednesday, the news background was quite interesting, and there were plenty of economic releases. However, the market once again ignored them. For most of the day, bulls continued their advance, seemingly driven by unexpected optimism about a possible end to the conflict in the Middle East. However, Donald Trump "corrected" the situation overnight. In a single 19-minute address to the nation, he managed both to issue new threats toward Iran—promising to wipe it off the face of the earth or at least send it back to the Stone Age—and to speak about a potential end to the war in the Middle East and negotiations with Tehran. The market, of course, focused on the first part of this contradictory speech, so bears returned to the attack. Today, Trump may announce successful negotiations, and bulls will take over again. This situation has been observed in the market for several weeks now. Therefore, traders need to be prepared for movement in either direction, as technical and economic analysis currently have little significance.
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 U.S. dollar. Thus, the decline may continue toward the same Fibonacci level of 1.1474. Earlier, the pair closed above the descending trend channel, which slightly improves the outlook for bulls compared to bears. However, geopolitics remains the decisive factor. No emerging divergences are observed in any indicators.
Commitments of Traders (COT) report:
During the last reporting week, professional traders closed another 12,861 long positions and 1,008 short positions. Thus, in just six 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 190,000. Six weeks ago, bulls had more than a twofold advantage among non-commercial traders.
Overall, in the long term, large players continue to show strong interest in the euro. Naturally, various global events—of which there has been no shortage in recent years—affect investor sentiment in different ways. At present, all market attention is focused on the Middle East, where the war continues to intensify and expand geographically. Therefore, in the near term, the euro and dollar exchange rate will depend not on the monetary policies of the Federal Reserve or the European Central Bank, nor on economic data, but on the war in Iran. And for now, the dollar is benefiting the most from this situation.
News calendar for the U.S. and the Eurozone:
On April 2, the economic calendar contains only one entry. The impact of the news background on market sentiment on Thursday may be extremely weak or absent.
EUR/USD forecast and trading tips:
Selling the pair was possible after a close below 1.1577 on the hourly chart with a target of 1.1440. These trades can be held open for some time. Buy positions will become possible after a consolidation above 1.1577, 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.
*Analiza tržišta koja se ovde nalazi namenjena je boljem razumevanju tržišta i ne pruža instrukcije za vršenje trgovanja.
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