Analysis of EUR/USD 5M

The EUR/USD currency pair continued its nearly catastrophic decline throughout Friday. There was no shortage of macroeconomic data on the last trading day of the previous week. In the morning, a report on industrial production in the Eurozone for January was published, showing a 1.5% month-on-month decline. In the afternoon, a whole batch of economic reports came from across the ocean. The core personal consumption expenditures price index was 0.4% in January (in line with forecasts), durable goods orders remained unchanged in January (far worse than forecasts), the GDP in the fourth quarter was revised to 0.7% (from an initial estimate of 1.4% and a third-quarter value of 4.4%), the JOLTs job openings number was at 6.946 million (lower than expected), and the University of Michigan consumer sentiment index was at 55.5 in March (forecasted at 55).

As we can see, most of the reports turned out to be positive for the American currency, if not for one "but." The positive data were the least important reports. For example, what is the point of rising consumer confidence if GDP has slowed from 4.4% to 0.7%? After examining all the macroeconomic data, we can ask only one question: why did we need to analyze them? The dollar began to rise as early as Tuesday. Speaking specifically about Friday, the dollar began to strengthen overnight and continued to do so throughout the day. Thus, neither positive nor negative reports influenced market sentiment.

On the 5-minute timeframe, the only trading signal on Friday formed at the close. However, the last trading signal was, in principle, formed on Thursday evening – the breakout of the level 1.1542. Thus, traders could open short positions as early as Thursday and close them on Friday, taking a profit of about 80-90 pips.

COT Report

The last COT report is dated March 10. The illustration of the weekly timeframe clearly shows that the net position of non-commercial traders remains "bullish," and since Trump took office as president of the US for the second time, only the dollar has been falling. In recent weeks, the American currency has been gaining value due to geopolitics, but the long-term upward trend remains.

We still do not see any fundamental factors that would strengthen the European currency. However, there are still plenty of factors for the decline of the American dollar. The war in the Middle East made the dollar temporarily super attractive, but when this factor expires is an open question. In the long term, the euro could fall as low as 1.06 (trend line), but the upward trend will still remain relevant.

The positioning of the red and blue lines of the indicator continues to indicate the persistence of a "bullish" trend. During the last reporting week, the number of long positions in the "Non-commercial" group decreased by 28,900, while the number of short positions decreased by 2,500. Consequently, the net position decreased by 25,400 contracts over the week.

Analysis of EUR/USD 1H

On the hourly timeframe, the EUR/USD pair remains in a downward trend amid geopolitical events in the Middle East. Donald Trump's statements about the imminent end of the war gave hope to traders at the beginning of last week, but by the middle of the week, it became clear that there could be no talk of a quick end to the conflict. The dollar has not yet updated its annual highs and continues to rise confidently.

For March 16, we highlight the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 1.1615-1.1625, 1.1657-1.1666, 1.1750-1.1760, 1.1830-1.1837, as well as the Senkou Span B line (1.1668) and the Kijun-sen (1.1542). The Ichimoku indicator lines may move throughout the day, which should be taken into account when determining trading signals. Don't forget to set a stop-loss order to break even if the price moves in the right direction by 15 pips. This will protect against potential losses if the signal turns out to be false.

On Monday, there are very few macroeconomic and fundamental events scheduled. A report on industrial production in Germany will be published in the Eurozone, but under current circumstances, it does not matter. Everything will again depend on geopolitics and the market's willingness to continue fleeing from risks.

Trading Recommendations:

On Monday, traders can consider new short positions if the price consolidates below 1.1426, with targets at 1.1362 and 1.1274. Long positions can be considered if the price consolidates above 1.1426, with a target at 1.1542.

Explanations for Illustrations:

Support and resistance price levels – thick red lines, around which movement may come to an end. They are not sources of trading signals.

Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.

Extreme levels – thin red lines from which the price previously rebounded. They are sources of trading signals.

Yellow lines – trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts – the size of the net position of each category of traders.