07.01.202112:17 Forex Analysis & Reviews: Analysis and forecast for EUR/USD on January 7, 2021

It often happens that from the very beginning of the new year, a new trend occurs or a previously established trend is confirmed. Naturally, this requires a specific driver, which is what market participants are looking for. It just so happened that this week the main attention was paid to Friday's data on the US labor market, and in this regard, the minutes of the Federal Reserve System (FRS), which were published last night, was completely forgotten. However, we must admit that the publication of the minutes of the last FOMC meeting did not make any significant changes in the dynamics of the main currency pair of the Forex market. It is not difficult to guess that the main topic in the published protocols was the COVIOD-19 pandemic, or rather its consequences for the world's leading economy. Despite the relative economic stability, last month, the leadership of the Federal Reserve found signs of a slowdown in economic activity. The Fed also expects a more significant increase in inflation in the coming year. As for bonds, their purchases will continue, as they provide stimulus to the world's leading economy.

Daily

Yesterday's trading of the euro/dollar pair ended with strong growth, closing trading above the resistance of 1.2309. In this scenario, the subsequent movement of the pair in the north direction was envisaged. However, it is always necessary to remember that one closed candle above or below the broken level still does not mean its true breakdown, especially since it turned out to be so strong. According to the author's personal opinion, for a true breakdown, it is necessary to close above or below the broken level of three consecutive candles, and only then it will be possible to assume that the pair is fixed above/below the broken mark. However, even after such fixations, the price sometimes returns and the breakdown has to be recognized as false. Let's see how it will be this time. It is quite reasonable to assume that the publication of American labor reports, which we will get acquainted with tomorrow at 14:30 London time, will have a significant impact on the course of weekly trading, and on which candle will eventually appear on the weekly. Today, at 11:00 (London time), the eurozone will publish data on retail sales and the consumer price index, and from the US data, I recommend paying attention to the figures on the trade balance, as well as the index of business activity in the service sector from the Institute for Supply Management (ISM), which will be released at 14:30 and 16:00, respectively.

H1

If you go to the trading recommendations, they are still more likely to indicate purchases of a single European currency. At the moment, on the hourly chart, it is visible that the pair gives a pullback to the broken resistance of 1.2309, right under which the dotted brown middle line of the ascending channel passes, as well as the 50 simple and 89 exponential moving averages. Purchases at more favorable prices can be tried after a short-term decline in the price area of 1.2285-1.2275. The nearest targets for purchases are around 1.2343-1.2348. Regarding sales, at the moment, they already look late. But if a bearish candlestick analysis model appears below 1.2343, you can sell short, while only counting on a correction, with the nearest targets in the area of 1.2310-1.2300.