Today, I'd rather refrain from trading EUR/USD

Hello, dear traders!

The trading week seems to have just started. Yet, today marks its close, and I think we may now produce some preliminary results. It is highly unlikely that some drastic changes take place in the market before it is closed. First of all, this has been a rather productive week in terms of the price movement. The main currency pair on Forex finally left the sideways channel and headed upward. Actually, the price leaves any range sooner or later and goes in a chosen direction, but the fact that EUR bulls broke the corridor and pushed the price up at the very moment Jerome Powell was testifying in the US Senate is more important here. As we know, Powell is likely to be re-elected for the second term as the chairman of the world's most powerful central bank.

Mr. Powell has once again pledged to take rising inflation under control. Overall, he sounded hawkish in testimony before the Senate at least to ensure that the US dollar did not lose its earlier gains and did not suffer substantial losses versus its main counterparts. In fact, the Federal Reserve chairman was not the only one who was hawkish yesterday. Several other Fed members also spoke in favor of monetary policy tightening. In particular, Powell's deputy Lael Brainard said yesterday that due to mounting inflation, the Federal Reserve might start raising interest rates immediately after the quantitative easing (QE) program was curtailed. This means that it could happen already in March. So, why did the dollar turn bearish amid such hawkish comments and the regulator's commitment to curb rising inflation and bring it to the 2% targets? The answer is obvious. This plan has long been discussed, which means it has already been priced in by market participants.

Daily chart

As you can see, the black 89-day EMA and the 38.2% Fibonacci level were mentioned in my yesterday's review for a reason. In my opinion, it was these two indicators that provided strong resistance to the euro/dollar pair and pushed it down, preventing it from reaching the key psychological level of 1.1500. Indeed, the quote also showed growth yesterday, but it was more modest than the one observed the day before. Anyway, EUR bulls went above the Ichimoku Cloud but failed to settle above the black 89-day EMA and the 38.2% Fibonacci level. So, yesterday's daily candlestick formed an extensive upper shadow if taking into account the current trend reversal.

In any case, it seems that EUR bulls are not going to give up because the pair has already been above yesterday's highs today but pulled back and is now preparing to soar to 1.1500. If so and yesterday's candlestick is engulfed with growth, strong bullish sentiment that has recently been observed in the market will be confirmed. Alternatively, the possibility of a trend reversal will not prove to be true if yesterday's candlestick turns out to be a reversal one and EUR/USD returns in the Ichimoku Cloud. Due to an unclear technical picture on the chart, I believe traders should not rush to enter new positions on EUR/USD. I assume that the situation will become more clear on Monday when a new trading week kicks off.

Best of luck!