During Wednesday, the EUR/USD pair made two rebounds from the 100.0% corrective level at 1.1577 and showed a slight rise toward the 76.4% Fibonacci level 1.1696. However, as of Tuesday morning, the pair returned to the 1.1577 level. Thus, another rebound from this level would again favor the European currency and growth toward 1.1696. A consolidation of the pair below 1.1577 would allow traders to expect a continuation of the decline toward the next corrective level of 127.2% – 1.1440.

The wave structure on the hourly chart remains simple. The last completed upward wave failed to break the peak of the previous wave, while the new downward wave confidently broke the previous low. Therefore, the trend remains bearish. Bulls have taken a pause within a large-scale offensive that would have been impossible without Donald Trump. However, it is precisely the actions of Donald Trump in the Middle East—which provoked large-scale military operations involving about a dozen countries—that are now working in favor of the US currency.

On Wednesday, the news background supported both bulls and bears, but the bears still took a small pause after a two-day assault. Therefore, the European currency was able to recover slightly. Over the past day it became known that the unemployment rate in the Eurozone, contrary to forecasts, decreased to 6.1%. In the US, the ADP report showed an increase in employment by 63 thousand, exceeding the lower forecasts, and the ISM services PMI exceeded traders' expectations by 2.6 points. Thus, in the first half of the day bulls could attack, while in the second half bears could take the initiative. But as already mentioned, the bears took a short pause, which appears to have ended with the start of Wednesday.

Today the information background will be very weak, allowing traders to shift their attention back to geopolitics. According to the latest reports, the war in Iran could become even more large-scale than it is now, and its consequences may affect more than just the economy. Iran has begun striking data centers, which could potentially lead to global internet outages. At the same time, Iraq has begun a ground operation, and military experts report that the war could last until the autumn of this year.

On the 4-hour chart, the pair returned to the 38.2% corrective level at 1.1642, rebounded, and reversed in favor of the US dollar. Thus, the decline in quotes may continue toward the 23.6% Fibonacci level at 1.1577. A rebound from this level would favor the euro and a return to 1.1642. A consolidation below 1.1577 would increase the chances of a further decline toward the next corrective level of 0.0% – 1.1471. No emerging divergences are currently observed on any indicators.

Commitments of Traders (COT) Report

During the last reporting week, professional traders closed 16,676 long positions and opened 948 short positions. The sentiment of the non-commercial group remains bullish thanks to Donald Trump and his policies, but in recent weeks we have seen a reduction in long positions. The total number of long positions held by speculators now stands at 294 thousand, while short contracts amount to 138 thousand. The bulls' advantage remains more than twofold.

Overall, in the long term large players continue to reduce short positions and increase long ones. Naturally, various global events—which have been abundant in recent years—affect investors in different ways. At the moment, all market attention is focused on the Middle East, where the war continues to intensify and expand geographically. Thus, in the near future the euro and dollar exchange rates will depend not on Donald Trump's policies but on the war in Iran.

News calendar for the US and the Eurozone

• Eurozone – Retail Sales Change (10:00 UTC)
• US – Initial Jobless Claims (13:30 UTC)
• Eurozone – Speech by ECB President Christine Lagarde (17:00 UTC)

On March 5, the economic calendar contains three notable entries, but once again economics may remain overshadowed by geopolitics. The information background may still influence market sentiment on Thursday, but technical analysis is now coming to the forefront.

EUR/USD forecast and trading tips

Selling opportunities previously appeared after a rebound from 1.1830 on the hourly chart with targets at 1.1770, 1.1696, and 1.1577. All targets have been reached.

Today, short positions can be considered if the pair closes below 1.1577, with a target of 1.1440.

Long positions can be considered if quotes rebound from 1.1577, with a target of 1.1696.

Fibonacci grids are built from 1.1805–1.1578 on the hourly chart and from 1.1919–1.1471 on the 4-hour chart.