During Monday, the EUR/USD pair continued its decline toward the 127.2% corrective level at 1.1440 after consolidating below the 100.0% Fibonacci level at 1.1577. By the end of the day, this level was almost reached. A rebound from the 1.1440 level would favor the euro and lead to some growth toward 1.1577. Consolidation below 1.1440 would increase the chances of further decline toward 1.1374 and 1.1282.

The wave structure on the hourly chart remains clear. The last completed upward wave broke the previous peak by only a few pips, while the new downward wave broke the previous low. Thus, the trend has once again turned "bearish." In recent months, bulls have been unable to counter the bears. Donald Trump's actions in the Middle East have triggered large-scale military activity in the region involving about a dozen countries, allowing the dollar to expect further strengthening.

On Monday, the news background was very weak and, as usual, had no impact on trader sentiment. Germany's Consumer Price Index for March was the first to confirm traders' worst fears. Inflation is rising—and rising very quickly. In just one month, consumer prices jumped to 2.7% year-over-year, whereas a month earlier inflation was only 1.9%. Thus, in Europe (with the corresponding report due today), inflation will most likely also rise sharply. From these two reports, traders should conclude whether the ECB is ready to tighten monetary policy parameters as early as April, which previously would have triggered a strong bullish attack amid Fed inaction. However, at present, strong growth of the euro or a bullish trend is unlikely. I would not want to write off the euro and bullish traders, but in recent weeks they had fairly good opportunities for growth and attacks—and failed to take advantage of them. Therefore, the market will likely continue to focus only on events related to oil prices and the situation in the Middle East.

On the 4-hour chart, the pair rebounded from the 76.4% Fibonacci level at 1.1617, reversed in favor of the US dollar, and declined to the 100.0% corrective level at 1.1474, which has already been reached. Consolidation below 1.1474 increases the probability of further decline toward the next corrective level at 127.2% – 1.1310. A bullish trend will become possible after the euro closes above the descending trend channel. In that case, the first target for bulls would be 1.1706. No emerging divergences are observed on any indicators.

Commitments of Traders (COT) Report:

Over the last reporting week, professional traders closed another 12,861 long positions and 1,008 short positions. Thus, in just six weeks, the total advantage of bulls has disappeared. The total number of long positions held by speculators is now 200,000, while short positions amount to 190,000. Six weeks ago, the bulls' advantage among non-commercial traders was more than double.

Overall, in the long term, large players continue to show strong interest in the euro. Of course, various global events—of which there has been no shortage in recent years—affect investor sentiment differently. In particular, the market's attention is now focused on the Middle East, where the war continues to escalate and expand geographically. Thus, in the near future, the euro and dollar exchange rate will depend not on the monetary policies of the Fed or the ECB, nor on economic data, but on the war in Iran. And for now, the dollar is extracting maximum benefit from this situation.

News calendar for the US and the Eurozone:

• Germany – Retail sales change (06:00 UTC).
• Germany – Unemployment rate (07:55 UTC).
• Eurozone – Consumer Price Index (09:00 UTC).
• United States – JOLTS job openings change (14:00 UTC).

On March 31, the economic calendar contains four entries, of which only EU inflation is of real interest. The impact of the news background on market sentiment on Tuesday is expected to be weak.

EUR/USD Forecast and Trading Tips:

Selling the pair was possible after consolidation below 1.1577 on the hourly chart with a target of 1.1440. New short positions can be opened after a close below 1.1440 with targets at 1.1374 and 1.1282. Buying positions will become possible if the pair rebounds from 1.1440 with a target of 1.1577.

Fibonacci levels are plotted from 1.1577–1.2082 on the hourly chart and from 1.1474–1.2082 on the 4-hour chart.