EUR/USD – 1H.
On January 5, the EUR/USD pair resumed the growth process to the corrective level of 323.6% (1.2308). The rebound from it again allowed the pair to perform a reversal in favor of the US currency and begin the process of falling in the direction of the level of 1.2272. However, it did not last long and now the pair's quotes have returned to the Fibo level of 323.6% (1.2308). Fixing the pair's rate above the level of 323.6% will increase the probability of further growth in the direction of the level of 1.2353. Meanwhile, the so-called power struggle is once again gaining momentum in Washington. Donald Trump, after weeks of relative calm, has announced a "hell of a battle" if Democrats take over the Senate and the White House. The US President means that he will not allow Democrats to control the House of Representatives, the Senate, and the White House. However, with the first and third point, Trump will not be able to do anything. It was the Democrats who formed the majority in Congress, Nancy Pelosi (Democrat) was re-elected Speaker of the House of Representatives, and Joe Biden will become president of the country. Thus, questions remain only on the Senate, where Democrats can match the number of seats with Republicans if they win the state of Georgia, which is currently holding a second round of voting for senators. Trump continues to claim that he won the presidential election by a huge margin, however, the victory was stolen from him. Therefore, he intends to fight to the end. He also said that people, supporters of Donald Trump, are coming to Washington to hold a protest. The action is scheduled for January 6, when the US Congress will begin ratifying the results of the presidential election.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the European currency and resumed the growth process in the direction of the corrective level of 200.0% (1.2353). The upward trend line continues to characterize the mood of traders as "bullish". Fixing the pair's rate under the trend line will work in favor of the US currency and some fall in the direction of the Fibo level of 161.8% (1.2027). The rebound of quotes from the level of 1.2353 will also work in favor of a certain drop in quotes.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair continue the process of growth in the direction of the corrective level of 423.6% (1.2495). Until the moment when the pair makes a consolidation under the level of 323.6%, there are still high chances of growth.
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 5, the US ISM business activity index for the services sector was released, which was significantly better than traders' expectations. However, this report did not affect the general mood of traders and the US currency continued to fall.
News calendar for the United States and the European Union:
EU - index of business activity in the service sector (09:00 GMT).
US - change in the number of employees from ADP (13:15 GMT).
US - PMI for the services sector (14:45 GMT).
US - publication of the minutes of the Fed meeting (19:00 GMT).
On January 6, a rather important ADP report will be released in America, and in the evening the minutes of the last FOMC meeting will be published. Indices of business activity in the service sector have a lower priority for traders.
COT (Commitments of Traders) report:
The activity of major players in the last two weeks of 2020 was very weak. The "Non-commercial" category of traders, according to the latest COT report of December 29, got rid of 57 long contracts and opened new 1,660 short contracts. Thus, their mood has once again become more "bearish", but in general remains strongly "bullish", as the number of contracts focused on their hands remains strongly in favor of long (224,000 – 79,000). Nevertheless, their mood may become more "bearish", but this does not have much effect on the euro currency yet. Thus, I can conclude that speculators continue to look closely at the sales of the euro currency, but are waiting for the right moment or some kind of push.
EUR/USD forecast and recommendations for traders:
On Wednesday, I recommend selling the euro in case of a rebound from the level of 1.2353 on the 4-hour chart with the target of a trend line. New purchases of the pair can be opened with a target of 1.2353 when the quotes are fixed above the level of 323.6% (1.2308) on the hourly chart.
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.
