Good day!
At the auction on March 2-6, the main currency pair of the Forex market continued to strengthen. At the same time, the growth was quite significant, and even strong labor reports from the United States did not help the dollar. Market participants simply ignored them, which only confirms the change in the trend for EUR/USD. Now we can assume with more confidence that this is not a corrective pullback, but a change in the trend. The reason for such drastic changes was the emergency reduction of the Fed's main interest rate by 50 bps at once, which happened for the first time since the global financial and economic crisis of 2008-2009.
The main reason for these changes in market sentiment remains the spread of coronavirus around the world. Against this background, oil prices have collapsed, and the currency is a safe haven, the Japanese yen is in high demand and is very much strengthened.
Weekly
After the Swiss franc, the euro became the second currency that showed the greatest strengthening against the US dollar. The euro/dollar pair grew by 2.53% at the auction on March 2-6.
After the appearance of the candle highlighted on the weekly chart, the pair moved to an upward trend, which is technically quite natural. This week's trading opened with a bullish gap, which further indicates the market's tendency to sell off the US currency. If earlier the spread of the coronavirus supported the dollar, now the situation has changed radically.
I believe that the first fiddle in market sentiment is not played by the coronavirus at all, but by the decision of the US Central Bank to move to ease monetary policy. Many investors assume that at its March meeting, the Federal Reserve will once again lower the refinancing rate, but by 25 bps.
If we return to the technical picture, on the occasion of today's gap, the pair soared to 1.1494, which is near the important psychological mark of 1.1500. However, the euro bulls failed to keep the quote at these heights, and at the time of writing, the euro/dollar is trading around 1.1383.
At the moment, the current weekly candle has a fairly decent shadow at the top, and the pair has fallen below the 200 exponential moving average, which is at 1.1441. At the same time, EUR/USD is trading above the upper limit of the weekly Ichimoku indicator cloud.
It is necessary to understand that the auction has just opened and changes may occur several times before their completion. The final model and closing price relative to the 200 EMA and the upper limit of the Ichimoku cloud will be very important. I do not exclude that a reversal candlestick pattern will be formed, which will become a signal for the pair's sales.
In the current situation, market sentiment changes very often and quickly, which means that it is impossible to exclude a change in the current upward direction.
H4
At this stage of trading, it is not easy to make decisions about entering the market. Despite the fact that purchases remain, the main trading idea is an open gap and the probability of a rate adjustment.
In truth, there is no particular desire to buy at such high prices either. If the pair gives a corrective pullback to the area of 1.1325-1.1285, you can consider purchases, which will be confirmed by a bullish candle or candles. I will not offer any more recommendations for today.
Tomorrow, we will look at smaller time intervals and highlight the main macroeconomic events that will be presented to market participants this trading week.
Successful day!