03.04.2024 10:01 AM
EUR/USD: trading plan for European session on April 3. Euro trades higher

Yesterday, only one market entry signal was formed. I suggest we look at the 5-minute chart and figure out what happened. In my previous forecast, I paid attention to the level of 1.0744 and planned to make decisions on entering the market from there. A rise and a false breakout on this mark after the eurozone data generated a sell signal, but the pair did not fall, so I decided to leave the market. In the afternoon, a false breakout near 1.0752 produced a sell signal, but the bears failed to offer anything, which resulted in a loss.

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What is needed to open long positions on EUR/USD

The dollar fell and the euro strengthened after comments from the Federal Reserve officials that they do not rule out three or more interest rate cuts this year. But today everything may change, the morning will kick off with the euro area Consumer Price Index and the unemployment rate. While unemployment is fairly straightforward, if the price pressure sharply falls, this could exert pressure on the euro and bring back the downtrend. For this reason, it is best to wait for a decline and a false breakout in the area of new support at 1.0758, established yesterday, which is in line with the bullish moving averages. This will provide an entry point into the market with the goal of recovering to 1.0790. A breakout and a downward test of this range will lead to strengthening the pair, giving a chance to buy during a climb to 1.0826. The highest target will be 1.0863, where I will take profits. In case of a further decline in EUR/USD and lack of activity around 1.0758, the selling pressure on the euro will increase, which will lead to a larger drop with the prospect of testing 1.0726. I plan to enter the market there only after a false breakout has formed. I will open long positions immediately on a rebound from 1.0696, bearing in mind an upward correction of 30-35 pips within the day.

What is needed to open short positions on EUR/USD

Although the pair recovered, the euro is still under attack. However, it would be best to sell at more attractive prices. The formation of a false breakout near 1.0790, along with news that eurozone inflation continues to actively decline, would confirm the presence of major sellers in the market, creating a sell signal with the prospect of testing the new support at 1.0758. A breakout and consolidation below this range, as well as an upward retest, will provide another selling point during a slide of the price to 1.0726 - the weekly low, where buyers will become more active. The lowest target will be the 1.0696 low, where I will take profits. If EUR/USD moves up in the first half of the day, and the bears do not show up at 1.0790, the buyers will try to build an upward correction. In this case, I will postpone selling until the test of the next resistance at 1.0826. I will act there only on a false breakout. I plan to open short positions immediately on a rebound from 1.0863, bearing in mind a downward correction of 30-35 pips.

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COT report:

The COT (Commitment of Traders) report for March 26 showed a decline in long positions and an increase in short positions. Despite the past meeting of the Federal Reserve and the dovish tone of the FOMC policymakers, no one is yet going to give up selling risky assets until inflation in the US steadily ebbs away, as is clearly evident from the report. Given the recent statements by ECB policymakers who hinted at an active decline in inflation in the eurozone and a possible quick reversal to monetary easing and rate cuts, the European currency has no chance. For this reason, I bet on further development of the bullish trend in the US dollar and weakness in the euro. The COT report showed that long non-commercial positions fell by 2,189 to 180,193, while short non-commercial positions jumped by 14,959 to 148,999. As a result, the spread between long and short positions increased by 2,184.

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Indicators' signals

Moving averages

Trading above the 30- and 50-day moving averages indicates that the pair is rising.

Note: The period and prices of the moving averages are considered by the analyst on the 1-hour chart and differ from the general definition of classic daily moving averages on the daily chart.

Bollinger Bands

In case EUR/USD goes down, the indicator's lower border near 1.0758 will act as support.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
Miroslaw Bawulski,
Analytical expert of InstaForex
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Euro vs US Dollar
1 day
Maxim Magdalinin
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