Despite the poor fundamental and external background of yesterday, trading on the main currency pair was quite volatile. The pair was actively moving in both directions. In the first half of yesterday's trading, data from Germany on retail sales and unemployment came in, which were weaker than experts' expectations. It can be assumed that this was the main reason for the pressure on the single European currency. Later, the eurozone consumer price index was published, which coincided with the forecast values and did not present any surprises to market participants. I believe that after these reports, the euro has stabilized and stopped declining. Moreover, the pair moved to strengthen, compensating for the losses incurred before.
As often happens in the market, the correction develops into a change in the trend. This happened on March 2 at the EUR/USD auction, and the reason can be considered a "dovish" speech by a member of the US Federal Reserve's Open Market Committee, Lael Brainard. In principle, the FOMC official did not say anything new. The main theses of Brainard's speech were the hardships brought by the COVID-19 pandemic, as well as the already familiar soft tone based on low inflation, as a result of which interest rates in the United States will remain at current low levels for a long period. Nothing new or unexpected. Based on this, I continue to adhere to the opinion that yesterday's trading course was mainly influenced by the technical picture for the euro/dollar, which we immediately proceed to analyze.
As emphasized in the previous article on the main currency pair, the important psychological level of 1.2000 is not a mark that is passed easily and immediately. We were once again convinced of this yesterday. The attempts of the EUR/USD bears to push this significant level again turned out to be a failure for them. After falling to 1.1991, the pair found strong support and recovered losses. They also managed to finish Tuesday's trading with growth, closing the session with a fairly decent bullish candle at 1.2089. At the same time, the long tail (lower shadow) of yesterday's candle again signaled that the market is not yet ready to trade on EUR/USD below 1.2000. In principle, given the shape of yesterday's candle, it can be considered a reversal. But whether it will become such will show the course of today's trading, where attempts to continue yesterday's rise are still held back by the blue line of the Ichimoku Kijun indicator, which passes near another very important and strong level of 1.2100. Having already been at 1.2107 today, the pair bounced down and is trading near 1.2086 at the end of the article.
On this timeframe, I stretched the Fibonacci grid for a fall of 1.2242-1.1991. As you can see, a correction was made to the middle of this downward movement, after which the bulls slowed down their ardor, and the current candle at the end of the article looks like a reversal. Given the presence of the daily Kijun line under 1.2100, as well as the presence of moving averages used here on the four-hour timeframe, it suggests opening sales from the price zone of 1.2100-1.2120. If the pair goes up all three moving averages (89 EMA, 200 EMA, and 50 MA) and can gain a foothold higher, then I recommend considering purchases on the pullback to them. Yesterday's trading and the daily candle made it a little doubtful that the upward trend of EUR/USD is over and now the pair expects a downward trend. Nevertheless, at the moment, I continue to consider the main trading idea for the euro/dollar as sales that can be tried from the selected zone or slightly lower from 1.2080-1.2090. Looking at today's economic calendar, I recommend paying attention to the data from the United States on the change in the number of employees from ADP, as well as the index of business activity in the service sector from the Institute for Supply Management (ISM). Perhaps these reports will have an impact on the price dynamics of the main currency pair of the Forex market. Also, do not forget that this Friday, data on the US labor market will be published, which will put everything in its place.
*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.
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