EUR/USD – 1H.
On January 26, the EUR/USD pair performed on the hourly chart a fall to the ascending trend line, a rebound from it, a reversal in favor of the EU currency, and resumed the growth process in the direction of the corrective level of 76.4% (1.2182), near which it stopped last time. The rebound of the pair's rate from this Fibo level will work in favor of the US dollar and increase the probability of closing quotes under the trend line, which will change the mood of traders to "bearish". Meanwhile, traders gradually approached almost the main event of January – the Fed meeting. Attention to the ECB meeting was quite small, as everyone understood that there would be no changes in monetary policy and no hints of future changes either. But the Fed now has a lot of questions that traders are eager to get an answer to. First, in the United States, the president has changed, and at the same time, the Minister of Finance. Although the Fed does not obey the president and Congress, nevertheless, certain changes in its policy may occur. Secondly, as no one has canceled, the recovery from the pandemic crisis continues. The Fed continues to buy back $ 120 billion worth of securities and treasuries every month, saturating the economy with money. Also, the US economy should soon receive $ 1.9 trillion under the "Biden rescue plan", and some economists believe that the Fed itself can increase the volume of the quantitative stimulus program. So Jerome Powell's speech today and the Fed's cover letter will be important. Hints of a new easing of monetary pressure may lead to a new fall in the US dollar.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes, after the formation of a bullish divergence in the MACD indicator, generally continue the growth process in the direction of the corrective level of 200.0% (1.2353). Another bullish divergence in the CCI indicator also supported the pair's growth. The euro's outlook for the coming days depends on this divergence and the trend line on the hourly chart.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a rebound from the corrective level of 323.6% (1.2079). Thus, the growth of the European currency can now be continued in the direction of the corrective level of 423.6% (1.2496). The third chart also 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.
Overview of fundamentals:
On January 26, only the consumer confidence indicator was released in the United States, which did not attract much attention. There was even less news in the European Union. We can assume that the information background was zero on this day.
News calendar for the United States and the European Union:
US - change in the volume of orders for long-term goods (13:30 GMT).
US - FOMC decision on the main interest rate (19:00 GMT).
US - FOMC accompanying statement (19:00 GMT).
US - FOMC press conference (19:30 GMT).
On January 27, in addition to summing up the results of the Fed meeting, a report on orders for long-term goods will be released, which also has a fairly high value for traders.
COT (Commitments of Traders) report:
On Friday, another COT report was released, which is designed to help answer the question, what are the prospects for the euro currency? And at the beginning of 2021, 2 COT reports out of 3 show that they are "bullish". During the reporting week, speculators again strengthened their "bullish" mood, opening 8,244 long contracts and 1,357 short-contracts for the euro currency. Thus, the category of "Non-commercial" traders is once again looking in the direction of increasing purchases of the euro currency. So they believe in its further growth. The total number of long contracts focused on the hands of speculators also remains quite high, three times more than the number of short contracts.
Forecast for EUR/USD and recommendations for traders:
It was recommended to buy the euro currency with the targets of 1.2182 and 1.2214 on the hourly chart when it bounced off the trend line. Now it remains only to keep these positions open. It is recommended to open the pair's sales if the pair closes below the trend line on the hourly chart with targets of 1.2072 and 1.1997.
"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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