EUR/USD – 1H.
On January 7, the EUR/USD pair performed a consolidation under the upward trend line, thus, the mood of traders changed to "bearish", and the process of falling quotes can now be continued in the direction of the next corrective level of 261.8% (1.2201). In America, the situation has calmed down a little after yesterday's events in the Capitol. It remains only to deal with the consequences. So, according to official information, during the suppression of the attack of demonstrators on the US Congress, 4 people were killed. Donald Trump has already condemned (like many world leaders) what happened in Washington, but few people believed him. Let me remind you that earlier it was Donald Trump who announced a rally in Washington through social networks and called on his supporters to "go to the Capitol". Thus, the US Congress is thinking about a new impeachment of Trump. Does this make sense if Trump's presidential term expires on January 20? But in social networks, the American president will be blocked until January 20 for sure. It is an unprecedented occurrence for the President of the United States to be blocked by all social networks (American). Facebook Instagram CEO Mark Zuckerberg said that the accounts of Donald Trump will be blocked at least until the end of his presidential term, as through them he provokes violence. This decision was explained by the head of the two social networks by the need to ensure a peaceful transfer of power to Joe Biden and systematic violations of the company's rules by Donald Trump.
EUR/USD – 4H.
On the 4 hour chart, the quotes of the pair performed a reversal near the corrective level of 200.0% (1.2353) and, using bearish divergence, made a reversal in favor of the US dollar, starting the process of falling in the direction of the upward trend line, which still interprets the mood of traders as "bullish". Fixing the quotes under the trend line will increase the probability of a further fall in the direction of the corrective level of 161.8% (1.2027).
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 7, the European Union released the consumer price index, which remained at an extremely low level. The number of applications for unemployment benefits in the United States was better than traders' expectations. The ISM business activity index in the service sector also exceeded forecasts. Thus, the US dollar had an excellent opportunity for growth.
News calendar for the United States and the European Union:
US - unemployment rate (13:30 GMT).
US - change in the number of people employed in the non-agricultural sector (13:30 GMT).
US - change in the average hourly wage (13:30 GMT).
On January 8, all the most important news will be released in the United States. Most attention should be paid to Nonfarm Payrolls.
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 thousand – 79 thousand). 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 Friday, I recommend selling the euro with the target level of 261.8% (1.2201) with the stop loss level above the level of 1.2272 on the hourly chart. New purchases of the pair can be opened with the targets of 1.2272 and 1.2308 when the quotes rebound from the trend line on the 4-hour chart.
"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.