EUR/USD – 1H.
On January 18, the EUR/USD pair continued to fall for some time. By the end of the day, it performed a reversal in favor of the European currency and began a microscopic growth in the direction of the downward trend line. Thus, in the near future, a rebound of quotes from this line may be performed, which will allow traders to count on the pair's fall again. Closing above the trend line will change the current mood of traders to "bullish". In recent days, few interesting things are happening in the foreign exchange market. The calendars of economic events are not too crowded, many events are ignored and the entire market is in a kind of sluggish state in general. In such circumstances, you have to pay attention to those events that would never have been noticed in normal times. For example, today, there will be a speech by former Fed Chair Janet Yellen, who was appointed the new US Treasury Secretary under the Joe Biden administration. It is also expected that Yellen will announce the refusal to interfere in the exchange rate formation of the US dollar. According to Yellen, the value of any currency should be determined only by market mechanisms, while under Trump, the US dollar was constantly under pressure. Donald Trump believed that the current dollar exchange rate was too high and therefore, with the help of verbal interventions, he constantly tried to put pressure on it, and also openly called on the Fed to lower the rate. The Fed did not lower the rate until after the pandemic and the resulting crisis. The Fed is beyond the control of the US President. However, there was still some impact on the dollar under Trump. Under Yellen, the US will refuse to discuss the exchange rate.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes continued the process of falling in the direction of the corrective level of 161.8% (1.2027) until a bullish divergence was formed in the MACD indicator. Thus, the pair did not reach only a few dozen points to the level of 161.8% and began the process of growth. I warned you about this in yesterday's article. On the way down, the pair has several strong levels at once, from which it is possible to rebound and resume growth.
EUR/USD - Daily.
On the daily chart, the EUR/USD pair quotes returned to the corrective level of 323.6% (1.2079). The pair's rebound from this level will work in favor of the EU currency and the resumption of growth in the direction of the Fibo level of 423.6% (1.2496). Closing below it will increase the chances of a further drop in quotes to the lower border of the upward trend corridor.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On January 18, the calendars of economic events in the United States and the European Union were empty. Thus, the information background was completely absent.
News calendar for the United States and the European Union:
EU - business sentiment index from the ZEW Institute (10:05 GMT).
On January 19, little will change. The only report of the day is frankly secondary. The information background will still be extremely weak today.
COT (Commitments of Traders) report:
The activity of major players at the beginning of 2021 remains rather weak. At the very least, they do not open a large number of new contracts, preferring a cautious strategy. Speculators, according to the latest COT report, opened 2,731 long contracts and closed 6,042 short contracts. Thus, their mood abruptly became more "bullish". Let me remind you that the COT report is released with a three-day delay, so it does not take into account the fall in quotes of recent days. The "Non-commercial" category of traders, therefore, again increases long contracts, that is, believes in the new growth of the European currency? On all charts, the pair may rebound from important levels in the near future. If they are met, then the real upward trend can continue.
EUR/USD forecast and recommendations for traders:
On Tuesday, I recommend buying the euro currency with targets of 1.2182 and 1.2214 on the hourly chart, if the closing is made on the descending trend line. New sales of the pair can be opened with a target of 1.1997 at the close of quotes under the level of 127.2% (1.2072) on the hourly chart or at a rebound from the trend line.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
