On 3 March, the EUR/USD pair fell below the January low (around 1.15777), establishing the lowest level of the year. As of today, 5 March, the chart shows signs of a continuation of bearish momentum.
On one hand, demand for the USD as a “safe-haven currency” remains elevated amid the ongoing military conflict in the Middle East.
On the other hand, the euro is under pressure because:
→ rising energy prices put the European Union at a disadvantage;
→ traders may be cautious ahead of today’s ECB news (Lagarde’s speech is scheduled for 20:00 GMT+3).
Technical Analysis of the EUR/USD Chart
On 19 February, we:
- → noted that bears held a certain advantage during February;
- → highlighted lower highs and lower lows at points A-B-C;
- → suggested a potential bearish scenario.
Since then, the downward movement has developed into a sequence A-B-C-D-E-F. Analysing the key patterns on the EUR/USD chart now allows us to construct a descending channel.
In this context, yesterday’s bearish reversal (indicated by the arrow) is noteworthy, as it occurred:
- → in the 0.382–0.5 Fibonacci zone, indicating a weak recovery;
- → below the channel median, which acted as resistance.
Considering the above, it is reasonable to state that bears remain in control. Forex traders should not rule out further declines in EUR/USD towards a new yearly low (and a test of the lower boundary of the channel).
However, the long lower shadow at point F suggests aggressive demand around the psychological level of 1.15000, and market sensitivity to Middle East news could rapidly change sentiment.
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