I interpret this recent price action as another positive sign that favors at least some short-term corrective growth in the pair. I believe this initial move could potentially develop into a larger upward correction than what the current market sentiment might expect, given the oversold conditions from the prior decline. I maintain, however, that my immediate technical focus is firmly on the resistance zone defined by my Reaction Levels, which I have identified in the range of 1.1687 to 1.1690. I have strategically placed a pending sell order slightly above this zone at 1.1710, as I anticipate that this corrective rally will ultimately fail and resume the broader bearish trajectory. I observe that broader risky assets, like equities, haven't shown the sustained bullish priority required to fuel a robust, trend-like euro recovery, which reinforces my cautious stance
I analyze the euro's overall posture as being within a consolidating downward range rather than a sharp, impulsive trend, which suggests a lack of committed directional conviction in the market. I concluded that Friday's trading session failed to provide any meaningful clarity, particularly as the non-farm payroll figures were overshadowed by other narrative complexities. I am now turning my attention to the upcoming week, where I see two potent fundamental drivers on the horizon. I am especially focused on the upcoming release of the December CPI data this Tuesday, which I consider critically fresh and capable of directly reshaping Federal Reserve policy expectations. Furthermore, I am closely monitoring the political landscape, as the Supreme Court decision has been postponed until Wednesday, January 14th. I view these two events as creating a period of elevated volatility and potential breakout conditions. I manage my risk accordingly, knowing that while I am positioned for a continuation lower, the fundamental catalysts on Tuesday and Wednesday could easily override the current technical picture. I plan to remain adaptable, as the confluence of high-impact news within forty-eight hours demands respect for potential sudden momentum shifts, regardless of my predetermined order levels and resistance analysis. I will therefore be prepared to reassess my sell order and overall bias based on the market’s reaction to this incoming data, balancing my technical framework with the new narrative that will undoubtedly emerge.
