The EUR/USD pair continues a weak upward movement (or at least has not yet completed it) amid total geopolitical uncertainty. Over the past few days, the pair has changed direction several times, while traders are ignoring chart patterns. On Monday, Donald Trump stated that the war in the Middle East would end soon, which immediately caused the bears to retreat. However, just half an hour later, Iran announced that no negotiations with the U.S. were taking place and that the Strait of Hormuz would remain blocked. During the current week, Tehran reaffirmed its position several times. Traders who believed Trump on Monday are unlikely to fall for the same trick again. Further growth of the pair will only be possible if Trump's words are confirmed by concrete facts—and at the moment, they are not.
All of the U.S. dollar's growth over the past 4–5 weeks has been driven by geopolitics. That is why I have repeatedly said that I do not believe in the end of the "bullish" trend, despite the breakout of important trend-forming lows. At the moment, Imbalance 12 can be considered invalidated, but at the same time there has been no reaction to Imbalance 11. Thus, bulls may continue their attacks, and bears may resume their offensive. The movement of the past two months could very well turn into a "bearish" trend if geopolitics continues to support the dollar. However, at this point I am still not convinced that the "bullish" trend has ended. In any case, there are no new signals—neither bullish nor bearish.
Further growth of the U.S. dollar is only possible if geopolitics continues to strongly support the bears. As I have already said, this would require the situation in the Middle East not just to remain tense, but to worsen further. How much worse can it get than now? Oil would need to continue rising toward $150–200 per barrel (which it is already doing), more countries would need to enter the Middle Eastern conflict, and the economies of developed nations would have to literally suffer from high oil and gas prices. The conflict itself would also need to drag on for many months. Previously, I said I did not see the prerequisites for such a scenario—but there has been no positive news from the Middle East. The situation could flare up again at any moment.
At the moment, there are no new patterns for opening positions. In the near future, Imbalance 11 may be worked out, and if the price reacts to this pattern, traders will have an opportunity to open short positions. However, for now, Imbalance 11 remains untested (for the second time), and there are no other trading patterns available.
The chart picture still signals "bullish" dominance. The bullish trend remains in force, but at present, bullish traders are in an unenviable position due to the sharply changing news flow. To open new long positions, new bullish patterns are needed, or at least liquidity grabs from the last two bearish swings. A liquidity grab has occurred, but it is not a pattern and cannot be used as a basis for opening trades.
The news background on Thursday was essentially absent. In Germany, the consumer confidence index was released today, and it reflects the current global situation quite well: -28 points.
There are still plenty of reasons for bulls to attack, and even the outbreak of war in the Middle East has not reduced them. Structurally and globally, Trump's policies—which led to a significant decline in the dollar last year—have not changed. In the near term, the U.S. currency may strengthen amid investors fleeing risk, but this factor cannot support it indefinitely. There are no other strong supporting factors for the dollar.
I still do not believe in a "bearish" trend. The dollar has received temporary support from the market, but it is not certain that this situation will last for a long time. However, the "bullish" trend has been broken, and this must be acknowledged, however unfortunate it may be. There is still a chance for a liquidity grab and a resumption of the trend, but geopolitics may once again drag the EUR/USD pair down like dead weight.
News Calendar for the U.S. and the Eurozone:
U.S. – University of Michigan Consumer Sentiment Index (14:00 UTC).
On March 27, the economic calendar contains only one entry, which is of little interest. The impact of the news background on market sentiment on Friday will be weak or absent.
EUR/USD Forecast and Trading Advice:
In my opinion, the pair remains in the stage of forming a "bullish" trend. The news background sharply changed direction three weeks ago, but the trend itself cannot yet be considered fully canceled or completed. Therefore, in the near future, traders need new patterns and signals to form short-term forecasts and open trades.
In the near term, bears may receive a signal at Imbalance 11, but the invalidation of Imbalance 12 is also a kind of signal. Bulls, meanwhile, can only hope for the formation of new bullish patterns and further buy signals.
