EUR/USD – 1H.
On January 25, the EUR/USD pair performed another rebound from the corrective level of 76.4% (1.2182) and began the process of falling in the direction of the ascending trend line, which continues to characterize the mood of traders as "bullish". Thus, the rebound of the pair from this line will work in favor of the European currency and the resumption of growth in the direction of the level of 76.4%. Closing below it will increase the probability of a further fall in the direction of the Fibo level of 127.2% (1.2072). Meanwhile, an international economic forum started in Davos, and one of the first speakers was Christine Lagarde. In general, the participants of the forum, among whom were many world leaders, discussed the problem of the "reset of capitalism". It is no secret that the world remains at the mercy of the "coronavirus", and vaccination is not yet at the pace and with the results that everyone expected. The ECB president said that the main goal should be a favorable financing environment so that any investors can be sure that the financing will be available to them both for consumption and investment. Yesterday it became known that about 80 major and reputable economists lowered their forecasts for the growth of the Eurozone in the first quarter to 0.6%. Thus, the European economy will almost completely shrink in the fourth quarter and show minimal growth in the first. These factors may lead to the closing of quotes under the ascending trend line.
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 is also brewing for the CCI indicator, which may support 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 25, there were no major events or economic reports in the United States. All the news of the day came down to the speech of Christine Lagarde, who did not impress traders too much with her arguments about the global problems of the Eurozone economy.
News calendar for the United States and the European Union:
US - consumer confidence indicator (15:00 GMT).
On January 26, the European Union's calendar of economic events is empty, and the US will release a report on consumer confidence.
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 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 to traders:
On Tuesday, I recommend buying the euro currency with targets of 1.2182 and 1.2214 on the hourly chart, if a rebound from the trend line is made. It is recommended to open sales of the pair if the pair closes below the trend line on the hourly chart with targets of 1.2072 and 1.1997.
Terms:
"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.
