On Monday, the EUR/USD pair once again moved toward the 1.0944 level, but this time, bulls failed to reach this target. As a result, no new trading signals were generated. At the moment, the pair is fluctuating between 1.0857 and 1.0944, with low market activity. A rejection from 1.0944 would favor the U.S. dollar, potentially triggering a decline toward the 200.0% Fibonacci level at 1.0857.

The wave pattern on the hourly chart has shifted. The last completed downward wave broke the previous low, while the last upward wave surpassed the previous peak, indicating a bullish trend. However, the current rally appears impulsive, as bulls are driven by fears of a U.S. economic slowdown caused by Donald Trump's policies. This factor has been one of the main reasons for the U.S. dollar's recent decline.

Monday's fundamental backdrop was mixed. The only notable U.S. report—retail sales for February—rose by just 0.2%, falling short of market expectations. This prevented bears from gaining control once again. Meanwhile, ECB President Christine Lagarde issued a warning about the consequences of the U.S. trade war.

According to Lagarde, the trade war will cause greater damage to the U.S. than to other countries. She stated that many affected nations are already working on retaliatory tariffs and engaging in negotiations to avoid further escalation. However, Lagarde remains pessimistic, believing that global trade conflicts will harm all economies, slow global growth, and fuel inflation—with America suffering the most.

The market seems to share this view, as dollar bulls are absent. This week's FOMC meeting could influence sentiment, but I doubt it will be a positive catalyst for the U.S. dollar.

On the 4-hour chart, the bullish trend remains intact following a breakout above the horizontal range. The rising trend channel confirms this momentum. A rebound from the 61.8% Fibonacci level at 1.0818 suggests a potential move toward the next Fibonacci retracement at 1.0969.

Despite this, bearish divergence on the CCI indicator and RSI overbought conditions continue to signal a possible correction, though bears have not acted yet. A break below 1.0818 would open the door for a decline toward 1.0696.

Commitments of Traders (COT) Report

During the last reporting week, professional traders opened 3,424 long positions while closing 19,772 short positions. As a result, the "Non-commercial" category has turned increasingly bullish—largely thanks to Donald Trump.

The total long positions among speculators now stand at 188,000, while short positions have declined to 175,000.

For 20 consecutive weeks, large traders were reducing their euro holdings, but for the past five weeks, they have been unwinding short positions and adding longs. The divergence between ECB and Fed monetary policy still favors the U.S. dollar, given the interest rate differential.

However, Trump's policies remain the dominant market factor, as they could push the Federal Reserve toward a more dovish stance and even lead the U.S. economy into a recession.

Key Economic Events – March 18

• Eurozone – ZEW Economic Sentiment Index (10:00 UTC)
• Germany – ZEW Economic Sentiment Index (10:00 UTC)
• U.S. – Building Permits (12:30 UTC)
• U.S. – Housing Starts (12:30 UTC)
• U.S. – Industrial Production Change (12:30 UTC)

Although the economic calendar includes five events, none of them are major market movers. However, the sheer volume of data releases could create moderate market impact on Tuesday.

EUR/USD Forecast and Trading Recommendations

Short positions are viable if EUR/USD breaks below 1.0818 on the 4-hour chart, with targets at 1.0734 and 1.0622.

Buying can be considered, but I remain cautious about the pair's relentless, nearly uninterrupted rally. I am wary of such one-sided price action, but that does not mean the uptrend cannot continue.

Fibonacci retracement levels are drawn from 1.0529 to 1.0213 on the hourly chart and from 1.1214 to 1.0179 on the 4-hour chart.