EUR/USD. March 9. COT report. Fed is not worried about rising Treasury yields



On March 8, the EUR/USD pair continued the process of falling and it consolidated under the corrective level of 127.2% (1.1873) by the end of the day. Thus, the process of falling can now continue in the direction of the next corrective level of 161.8% (1.1772). The downward trend corridor continues to characterize the current mood of traders as "bearish". Meanwhile, US government bond yields continued to rise on Monday and rose to 1.6% during the day. This point concerns many people, and until recently it was believed that the Fed was among these individuals. However, on Monday, the head of the Federal Reserve Bank of Minneapolis, Neil Kashkari, said that he would be forced to think about such a phenomenon as a strong increase in the real yield of 10-year treasuries.

However, while the nominal yield has increased to 1.6%, the real yield is only 0.66%. According to Kashkari, if the real yield were to grow at the same rate as the nominal one, it could mean that the current size of the stimulus program is no longer enough and it would have to be expanded. Let me remind you that the real yield is nominal, adjusted for inflation. That is, if inflation is higher than the nominal yield, then in general, the treasuries will be unprofitable for investors. This often happens with treasuries of any duration. The lower the negative yield, the more profitable it is for the state and the less profitable it is for investors. Therefore, at low or negative rates, the demand for treasuries of all terms falls, which forces their nominal yield to grow. And the strong growth of this indicator is already making the Fed and the government nervous. However, as Kashkari assures, nothing terrible happened. Earlier, Jerome Powell also did not make any hints about possible intervention from the Fed.



On the 4-hour chart, the pair's quotes continue the process of falling in the direction of the corrective level of 127.2% (1.1729). The rebound of the pair's rate from this level will allow traders to count on a reversal in favor of the European currency and some growth. However, the hourly chart is now a higher priority. There are no emerging divergences in any indicator today.

EUR/USD – Daily.


On the daily chart, the quotes of the EUR/USD pair have made a consolidation under the upward trend corridor, so the process of falling continues in the direction of the corrective level of 261.8% (1.1822). Closing the pair's rate below this level will increase the probability of a further fall in the direction of the next Fibo level of 200.0% (1.1566).

EUR/USD – Weekly.


On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.

News overview:

On March 8, the calendars of economic events in the United States and the European Union were empty. Thus, the influence of the information background was absent, which did not prevent traders from continuing to buy the dollar.

News calendar for the United States and the European Union:

EU - change in GDP (10:00 GMT).

On March 9, the European Union and the United States will release one economic report for two - on GDP in the Eurozone for the fourth quarter, which may attract the attention of traders.

COT (Commitments of Traders) report:


Last Friday, another COT report was released, and after three fairly neutral reports, it turned out to be quite aggressive. The number of long contracts concentrated in the hands of the "Non-commercial" category of traders decreased by 8 thousand, and the number of short contracts increased by 8 thousand. Thus, the mood of speculators has become much more bearish, which generally coincides with what is happening on the euro/dollar pair in the last two weeks. Based on this and the daily chart data, the probability of a further drop in the pair's quotes is growing. However, I remind you that the report for February 2 also showed discouraging figures, but a few days after it, a new increase in euro quotes began. In general, the number of long contracts in the hands of speculators still significantly exceeds the number of short contracts.

Forecast for EUR/USD and recommendations for traders:

It was recommended to sell the pair at the close of quotes under the level of 127.2% (1.1873) with a target of 1.1772 on the hourly chart. Now you can leave sales open for this purpose. I recommend buying the pair when closing above the downward trend corridor on the hourly chart with targets of 1.2021 and 1.2063.


"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.

"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.

"Non-reportable positions" - small traders who do not have a significant impact on the price.

The material has been provided by InstaForex Company -