On Friday, EUR/USD declined to the 50.0% Fibonacci retracement level at 1.0371, rebounded from it, and reversed in favor of the euro, consolidating above the 38.2% Fibonacci level at 1.0408. This suggests that further growth toward 1.0435 and 1.0455 remains possible. However, it's important to remember that the past three days (Friday through Sunday) have been packed with significant news events, and the upcoming week is expected to bring critical data almost daily. As a result, market movements may be volatile and unpredictable.

The hourly chart wave structure exhibits all the signs of a ranging market. The last completed upward wave broke the previous high, but the new downward wave also breached the previous low. This confirms that the market is experiencing complex horizontal movement, which is even more apparent on the 4-hour chart.

Friday's news was significant, but by Monday morning, traders had shifted their focus. Late Friday evening, tensions flared between the U.S. and Ukrainian presidents, triggering a series of consequences that the market reacted to during Monday's Asian session.

The diplomatic fallout has further strained relations between Washington and Kyiv, with traders reacting positively to reports that the U.S. may cut off financial aid to Ukraine, exit NATO, and withdraw from the UN. These are some of the most impactful decisions Donald Trump has made over the past few days.

Additionally, on Sunday, Trump announced the creation of a U.S. state crypto reserve, which sparked a frenzy in the cryptocurrency market. Given the overwhelming amount of breaking news and uncertainty, traders are struggling to keep up with market-moving developments.

Key questions remain: How should the market react to a potential U.S. withdrawal from funding Ukraine? Could this accelerate the resolution of the geopolitical conflict? What impact will it have on the U.S. economy and international relations?

Beyond politics, the week is packed with crucial economic reports, and each release could trigger strong reactions in the market.

On the 4-hour chart, EUR/USD retested the upper boundary of its horizontal range and failed to break through, leading to a reversal in favor of the U.S. dollar. The pair has now begun to decline toward the 1.0332 and 1.0225 support levels.

At present, no new divergences are forming on any technical indicators, suggesting that the bearish momentum could continue.

Commitments of Traders (COT) Report

During the last COT reporting period, professional traders opened 12,379 new long positions and closed 13,616 short positions. Despite this, the Non-commercial group remains bearish, though sentiment is gradually shifting. Currently, speculative traders hold 182,000 long positions and 208,000 short positions.

For the past twenty consecutive weeks, large traders have been selling euros, reinforcing the bearish trend. While occasional weeks show bullish dominance, these instances are more of an exception rather than a trend reversal.

The monetary policy divergence between the ECB and the Fed remains in favor of the U.S. dollar, as interest rate differentials continue to widen.

Although bearish dominance is slightly weakening, it is too early to call for the end of the downtrend. The number of long contracts has been increasing for four straight weeks, but the broader outlook still favors the dollar over the euro.

Key Economic Events for the Eurozone and U.S.:

• Eurozone – German Manufacturing PMI (08:55 UTC)
• Eurozone – Manufacturing PMI (09:00 UTC)
• Eurozone – Consumer Price Index (10:00 UTC)
• U.S. – Manufacturing PMI (14:45 UTC)
• U.S. – ISM Manufacturing PMI (15:00 UTC)

On March 3, at least two major reports—Eurozone inflation and the U.S. ISM Manufacturing PMI—will significantly influence market sentiment throughout the day.

EUR/USD Forecast and Trading Recommendations

Short positions were valid after a rejection from the 1.0526–1.0533 zone on the hourly chart, targeting 1.0458. This target, along with nearby levels, has already been reached. New short positions may become viable if the pair closes below 1.0408 or rejects key resistance levels above. Long positions are not recommended for now, as EUR/USD remains in a range-bound market and has recently rejected the upper boundary of the range.

Fibonacci Levels:

• Hourly chart: 1.0213–1.0529
• 4-hour chart: 1.0603–1.1214