On Friday, amid generally weak U.S. labor market data, the euro reached the target level of 1.0971 based on the 61.8% Fibonacci retracement of the movement from December 28 to February 14 and closed the day with a black candle. This is enough to end the corrective rise and resume the pair’s decline towards the February 14 low (1.0696).
However, the FOMC meeting is scheduled for next week, so speculators may push the quote into the range of 1.1001/10 or even to the target level of 1.1043, where the correction will be 76.4%. If we do see a new medium-term trend, the price will climb above 1.1140. But this is an alternative scenario.
As for the main scenario, we expect the price to fall below the level of 1.0905 with a simultaneous breakthrough of the MACD line, which has already approached the specified level. This paves the way for the price to reach the target of 1.0796 and further to 1.0724.
On the 4-hour chart, the primary and at the same time weak reversal signal is the downturn of the Marlin oscillator. Here we also see the MACD line approaching the target level of 1.0905. However, we don’t see reasons why the price could overcome these support levels.
Tomorrow, the U.S. Consumer Price Index for February will be released. The core index is expected to fall from 3.9% YoY to 3.7% YoY. On Wednesday, the Eurozone industrial production report for January will be published, with a forecast of -1.0% compared to 2.6% in December.
On Thursday, U.S. retail sales for February may show an increase of 0.8%, but this comes after a -0.8% plunge in January. The main driver of the euro’s decline could be the stock market. After the S&P 500 faced a spike in volatility on Friday, a double divergence was formed on the daily chart, and here we might see a decline for no reason at all.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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