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02.04.2024 01:43 PM
EUR/USD. April 2nd. The bears have taken another important step forward

The EUR/USD pair on Monday rebounded from the resistance zone of 1.0785–1.0801, turned in favor of the US dollar, and resumed the downward process towards the corrective level of 0.0%–1.0696. A rebound of the pair's rate from this level will work in favor of the EU currency and some growth back towards the zone of 1.0785–1.0801. A consolidation below the level of 1.0696 will further increase the probability of a further decline in the European currency. Bears continue to dominate the market.

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The wave situation remains quite clear. The last completed upward wave failed to break the peak of the previous wave (from March 8th), while the next downward wave broke the low of the previous wave (from March 19th) and continues to form. Thus, we are currently dealing with a "bearish" trend, and there is currently no sign of its completion. For such a sign to appear, the new upward wave must break the current last peak (from March 21st). For this, bulls need to raise the pair by at least 220 pips. Until this moment, I expect the decline in quotes to continue.

The news background on Monday was quite strong, although it was expressed by only one report. However, this report turned out to be significant, as it turned out today. The ISM Manufacturing PMI in the US rose in March from 47.8 to 50.3, with traders expecting 48.4. The manufacturing sector in many countries remains problematic, but in America, as we see, it has returned above 50.0, which now indicates recovery and growth. Thus, yesterday, the bearish traders understandably intensified their efforts and pushed the pair even further down. The news background currently supports the bears, so I expect the euro currency to continue to decline. The Fed is still not in a hurry to ease monetary policy, so there are no reasons to sell the dollar now.

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On the 4-hour chart, the pair closed below the Fibonacci level of 38.2%–1.0765 and continued the downward process towards the next corrective level of 23.6%–1.0644. There are no emerging divergences observed today with any indicator. A stop or reversal in favor of the euro currency can only occur around the level of 1.0696, which is the low from February 14th.

Commitments of Traders (COT) report:

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During the last reporting week, speculators closed 2,189 long contracts and opened 14,959 short contracts. The sentiment of the "non-commercial" group remains "bullish" but continues to weaken rapidly. The total number of long contracts held by speculators now stands at 180,000, and short contracts – 149,000. I still believe that the situation will continue to change in favor of the bears. In the second column, we see that the number of short positions increased from 83,000 to 149,000 over the past 2.5 months. During the same period, the number of long positions decreased from 235,000 to 180,000. Bulls have dominated the market for too long, and now they need a strong news background to resume the "bullish" trend. In the near future, I do not see such a background.

News Calendar for the US and the EU:

EU – Germany Manufacturing PMI (07:55 UTC).

EU – Manufacturing PMI (08:00 UTC).

EU – Consumer Price Index in Germany (12:00 UTC).

US – JOLTS Job Openings (14:00 UTC).

On April 2nd, the economic events calendar contains several entries of approximately the same scale. The impact of the news background on traders' sentiment may be moderate.

Forecast for EUR/USD and Trader Recommendations:

Sales of the pair were possible on a rebound from the support zone of 1.0785–1.0801 on the hourly chart with a target of 1.0696. Currently, they can be kept open. Purchases of the pair are possible on a rebound from the level of 1.0696 on the hourly chart with a target of 1.0785, but long positions cannot be a priority now since the trend is "bearish."

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