On 3 March, the EUR/USD pair slipped below the January trough, near 1.15777, marking the lowest point of the year so far. By 5 March, the chart reveals early signs that bearish pressure may continue.
The US dollar continues to benefit from safe-haven demand amid ongoing tensions in the Middle East, supporting its strength. Meanwhile, the euro faces headwinds due to:
→ Rising energy costs, which place additional pressure on the European economy;
→ Anticipation of today’s ECB update, with President Lagarde’s speech scheduled for 20:00 GMT+3, prompting caution among traders.
Technical Analysis of EUR/USD
As of 19 February, our observations included:
→ Bears appearing to have the upper hand during the month;
→ A sequence of lower highs and lower lows at points A-B-C;
→ The potential for a bearish continuation scenario.
Since then, the decline has progressed, forming a sequence A-B-C-D-E-F. Examining the current EUR/USD chart, a descending channel can now be drawn based on these key patterns.
Of particular note is yesterday’s bearish reversal (highlighted by the arrow), which occurred:
→ Within the 0.382–0.5 Fibonacci retracement zone, signalling a modest rebound;
→ Below the channel’s median line, which acted as resistance.
Given these observations, bears still appear to control the market. Forex traders should be prepared for the possibility of EUR/USD dropping to a new yearly low and testing the lower boundary of the channel.
At the same time, the long lower shadow at point F points to strong buying interest around the psychological level of 1.15000. Additionally, heightened sensitivity to Middle East developments could quickly shift market sentiment.
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