EUR/USD – 1H.
On January 19, the EUR/USD pair continued to increase and made a consolidation above the downward trend line. Thus, the mood of traders has changed from "bearish" to "bullish", and the growth can be continued in the direction of the corrective level of 76.4% (1.2182). After two weeks of falling, the European currency is again showing signs of wanting to grow. The information background of the last days and even weeks was not the most important. There were many events, but which of these events ultimately influenced the movement of the euro/dollar pair? A lot of things happened in America and separately in Washington. But is it possible to say that it was thanks to these events that the dollar grew at the beginning of 2021? Rather, it should have been the other way around. The dollar was supposed to decline against the background of a new political crisis, which can only be resolved today when Joe Biden's inauguration takes place. By and large, there is nothing special about this procedure. The first decisions of Biden as the president will be important, a list of which has already been published. Biden is going to celebrate some of Donald Trump's decisions and immediately begin work on getting out of the four crises that the country has plunged into under the Republicans. Donald Trump also recorded a farewell video and leaves the White House today. Also today, the European Union will release a rather interesting report on inflation, which has not pleased buyers of the euro currency for about six months, because it is below zero. However, according to forecasts, it is not necessary to wait for its acceleration now. Thus, inflation will remain deflation.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes, after the formation of a bullish divergence at the MACD indicator, performed a reversal in favor of the European currency and began to increase in the direction of the corrective level of 200.0% (1.2353). Closing quotes under the Fibo level of 161.8% will work in favor of the US dollar and resume falling towards the next corrective level of 127.2% (1.1729). So far, the two lower charts point to the likely growth of the euro currency.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a fall to the corrective level of 323.6% (1.2079) and a rebound from it. Thus, the growth of the European currency can now resume in the direction of the corrective level of 423.6% (1.2496). The third chart indicates a very likely growth of the pair.
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. The fourth graph.
Overview of fundamentals:
On January 19, the United States and the European Union released one report for two. The ZEW Institute's business sentiment index was slightly higher than traders had expected. In part, it could help the euro currency to grow over the past day.
News calendar for the United States and the European Union:
European Union - consumer price index (10:00 GMT).
On January 20, the calendars of the United States and the European Union remain almost empty. Only inflation will come out in Europe. Well, the inauguration of Joe Biden.
COT (Commitments of Traders) report:
The activity of major players at the beginning of 2021 remains quite 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 comes out with a three-day delay, so it does not take into account the drop in quotes of the last days. The "Non-commercial" category of traders, therefore, again increases long contracts, that is, believes in the new growth of the European currency? All charts now point to a very likely resumption of the upward trend.
EUR/USD forecast and recommendations for traders:
On Wednesday, I recommend buying the euro with the targets of 1.2182 and 1.2214 on the hourly chart, as the closing was made on the downtrend line. It is not recommended to open sales of the pair yet, as all four charts predict the growth of the pair in the coming days.
"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 market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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