Analysis EUR/USD 5M

The EUR/USD currency pair traded higher on Monday but remained below the trendline and the Senkou Span B line. Therefore, it is still too early to speak of a change of the local trend to bullish. On Monday, it became known that a criminal case had been opened against Jerome Powell on the same charges: exceeding the budget for repairs to Fed buildings and giving false testimony to Congress when that estimate was discussed. Thus, on Monday, the dollar plunged from the market open. However, during the day, its decline is not strong enough, so this factor may already be priced in. In that case, the downward trend will remain on the hourly TF, while the daily TF will definitely remain range-bound.

We continue to believe that the key factor for the euro (and perhaps for the entire FX market) remains the six-month flat in the 1.1400–1.1830 range. Last week, even the most important U.S. macro data on the labor market and unemployment failed to stir traders. The pair's volatility remains low except for rare exceptions, such as yesterday. But even such days are unable to pull the euro out of the sideways channel.

On the 5-minute TF, only one buy trading signal was formed. During the European session, the price settled above the critical line, but could not continue to rise. Below the support area, the range is also 1.1657–1.1666. Thus, today the upward movement may continue toward the Senkou Span B line. However, recall the trendline on the hourly TF. It may well stop the pair's rise and return it to a technical decline within the flat.

COT report

The latest COT report is dated January 6. The illustration above clearly shows that the net position of non-commercial traders was bullish for a long time; bears barely moved into a zone of superiority at the end of 2024, but very quickly lost it. Since Trump took office for a second time as U.S. president, only the dollar has been falling. We cannot say the dollar's decline will continue with 100% probability, but current global developments suggest that scenario. The red and blue lines are diverging, indicating strong bullish dominance.

We still do not see any fundamental factors that would strengthen the euro, while there remain sufficient factors that would weaken the U.S. currency. The global downward trend still persists, but what does it matter now where the price moved over the last 17 years? Over the past three years, only the euro has been rising, and that is also a trend.

The positions of the red and blue indicator lines continue to signal the preservation and strengthening of the bullish trend. During the last reporting week, the number of longs in the "Non-commercial" group increased by 3,500, while the number of shorts decreased by 1,800. Accordingly, the net position for the week grew by another 5,300 contracts.

Analysis EUR/USD 1H

On the hourly timeframe, the EUR/USD pair continues forming a downward trend. Several weeks ago, the upper line of the sideways channel 1.1400–1.1830 was tested twice, but the euro failed to break out of it. Thus, technically, the pair's decline is consistent. To count on euro appreciation and a new attempt to overcome the 1.1800–1.1830 area, one should wait at least for a breakout of the trendline.

For January 13, we highlight the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 1.1604–1.1615, 1.1657–1.1666, 1.1750–1.1760, 1.1846–1.1857, 1.1922, 1.1971–1.1988, as well as the Senkou Span B line (1.1734) and the Kijun?sen (1.1669). Ichimoku lines may shift during the day, which should be taken into account when determining trading signals. Do not forget to move the Stop Loss to breakeven if the price has moved 15 pips in the correct direction. This will protect against possible losses if the signal turns out to be false.

No interesting or important events are scheduled in the EU, while in the U.S., the final report from the triumvirate "Unemployment, labor market, inflation" will be released. This report may strongly influence future Fed decisions, so the market reaction to it may be strong.

Trading recommendations:

On Tuesday, traders may trade from the 1.1657–1.1666 area and the Kijun?sen line. A rebound from them will allow opening long positions with a target of 1.1734, while a close below will make shorts relevant with a target of 1.1604–1.1615.

Explanations of the illustrations:

• Price support and resistance levels (resistance/support) — thick red lines near which movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B lines — Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour. They are strong lines.
• Extremum levels — thin red lines from which the price previously bounced. They are sources of trading signals.
• Yellow lines — trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts — the size of the net position of each trader category.