Yesterday, traders received enough signals to enter the market. Let us take a look at the 5-minute chart to analyze the market situation. Earlier, I asked you to pay attention to the level of 1.0978 to decide when to enter the market. The euro managed to stay at the weekly lows and made an attempt to break 1.0978 amid quite good services PMI data in the eurozone. As a result, traders received several sell signals. The euro did not show a significant decline, losing just 20 pips. In the second part of the day, bulls started to protect the nearest support level of 1.0959. Several false breaks of this level gave good buy signals. The single currency neither showed a jump, but each time it gained about 15 pips. A drop in the euro recorded in the middle of the US trade and a test of 1.0928 provided market participants with a sell signal. As a result, the pair slid by about 25 pips.

Conditions for opening long positions on EUR/USD:

Yesterday, strong data on the US PMI boosted demand for the greenback. This also reflects the worsening geopolitical situation and traders' return to safe-haven assets. In addition, mounting demand for such assets could be explained by various economic problems in Europe. Investors do not believe that the Russia-Ukraine conflict will end soon. This, in turn, will inevitably lead to a slowdown in global economic growth. Today, countries will hardly publish any report that may affect the current market situation. That is why I suppose that the market sentiment will remain bearish. The eurozone PPI data is unlikely to surprise traders. An insignificant slowdown in the price growth will not allow bulls to gain control over the market. In the best-case scenario, we will see a slackening downtrend. Thus, long positions could be opened only if the pair falls to the support level of 1.0875. A drop may take place in case of a weak report on Germany's factory orders. In addition, the speeches provided by Vice-President of the ECB Luis de Guindos and Member of the Executive Board of the ECB Fabio Panetta may also influence the market. A false break of 1.0875 will give the first long signal. Bulls should be very active at the intermediate resistance level of 1.0913 to enable the pair to slacken the downward movement. However, even strong data from the eurozone will hardly push the price above this level. Only a downward test of 1.0913 will give an additional buy signal, allowing the pair to recover to 1.0940, where it is recommended to lock in profits. If the price breaks this level, it may climb to the highs of 1.0970 and 1.1007. If it goes on falling and bulls fail to protect 1.0875, it will be better to avoid long positions. Buy orders could be initiated after a false break of the low of 1.0843. It is also possible to go long from 1.0810 or 1.0722, expecting a rise of 30-35 pips within one day.

Conditions for opening short positions on EUR/USD:

Yesterday, bears pushed the euro to new local lows. Today, they should protect the nearest resistance level of 1.0913. Only a false break of this level may give a sell signal with the target at the support level of 1.0875. However, the price will not have a chance to break this level amid the absence of important macroeconomic reports. The fact that the MACD indicator is in the oversold area is capping the pair's downward potential. Traders should be very cautious when selling the pair, expecting a break of lows. The price may fall to these levels only in case of weak data on the eurozone PPI and negative announcements made by the ECB representatives. An upward test of 1.0875 will give a sell signal, thus making it possible for the euro/dollar pair to slide to the lows of 1.0843 and 1.0810, where it is recommended to lock in profits. If the euro gains in value and bears fail to protect 1.0913, nothing special will happen. The fact is that the single currency will jump only amid positive news about the Russia-Ukraine negotiations. That is why it will be better to go short after a false break of 1.0940. It is also possible to sell the euro from 1.0970 or higher – from 1.1007, expecting a decline of 20-25 pips.

Commitment of Traders Report

The COT report from March 29 unveiled a decrease in both short and long positions. Notably, the number of buyers who left the market exceeded the number of sellers who decided to stop trading. This fact points to pessimism among market participants caused by the current geopolitical situation. Meanwhile, a risk of higher inflation in the eurozone is the key issue for the ECB. Importantly, inflation has already jumped to 7.5%. Last week, Christine Lagarde several times emphasized the regulator's intention to switch to a more aggressive approach to the QE tapering and key interest rate hike. Against this background, the euro has a good mid-term prospect for growth. At present, the single currency is significantly oversold against the greenback. However, the absence of positive results in the Russia-Ukraine talks and a rise in the geopolitical tension have a negative influence on the euro. Economic problems in the eurozone provoked by extremely high inflation and responsive measures taken by Russia (including payments for gas in rubles) are likely to continue exerting pressure on the euro in the short term. That is why traders will hardly see a considerable increase in the pair. According to the COT report, the number of long non-commercial positions slid to 200,043 from 207,051. At the same time, the number of short non-commercial positions slumped to 178,669 from 183,208. Since a drop in the number of short positions turned out to be more significant, the overall non-commercial net position declined to 21,374 from 23,843. The weekly close price also dropped to 1.0991 from 1.1016.

Signals of indicators:

Moving Averages

Trading is conducted just below the 30- and 50-day moving averages, which indicates that bears are still controlling the market.

Note: The period and prices of moving averages are considered by the author on the one-hour chart that differs from the general definition of the classic daily moving averages on the daily chart.

Bollinger Bands

If the euro rises, the upper limit of the indicator located at 1.0970 will act as resistance. In case of a drop, the lower limit of 1.0865 will act as a support level for the euro.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing volatility and noise). The period is 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing
• volatility and noise). The period is 30. It is marked in green on the graph.
• MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). A fast EMA period is 12. A slow EMA period is 26. The SMA period is 9.
• Bollinger Bands. The period is 20.
• Non-profit speculative traders are individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions is a total number of long positions opened by non-commercial traders.
• Short non-commercial positions is a total number of short positions opened by non-commercial traders.
• The total non-commercial net position is a difference in the number of short and long positions opened by non-commercial traders.