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The EUR/USD currency pair continued its upward movement on Tuesday, building on Monday's gains. It is worth noting that there were no interesting events in the Eurozone or the US during the first trading day of the week. Nevertheless, the European currency rose sharply, and we see nothing surprising in this. Firstly, the pair remains within the range of 1.1400-1.1830, and movements within a flat can be completely arbitrary, not just from one boundary to another. Secondly, any rise in the euro and fall in the dollar is considered logical and expected, as the global fundamental backdrop remains unfavorable for the US currency, while the mid-term outlook remains bullish.
However, on Tuesday, the bulls' attempts to break out of the sideways channel after six months of confinement were unexpectedly halted by US reports. Specifically, by just one report—the GDP for the third quarter. The US economy grew by 4.3% in its second estimate, which probably surprised everyone. However, two other reports (on durable goods orders and industrial production) fell short, and thus the dollar's triumph was short-lived. The price again bounced off the upper boundary of the sideways channel, but we do not doubt that the euro will soon break free.
On the 5-minute timeframe, the only trading signal was formed on Monday. The price broke the 1.1750-1.1760 area, allowing for long positions. The upward movement continued on Tuesday until the US GDP report was released, prompting traders to close their long positions after this release.
The latest COT report was released last week and is dated December 9. As seen in the illustration above, the net position of non-commercial traders has been bullish for a long time, and bears struggled to gain an advantage at the end of 2024 but quickly lost it. Since Trump took office for the second time, the dollar has only been declining. We can't say that the fall of the US currency will continue with 100% certainty, but the current developments in the world suggest this scenario.
We still do not see any fundamental factors supporting the strengthening of the European currency, while there remain sufficient factors for the weakening of the American one. The global downward trend is still ongoing, but what does it matter where the price has moved over the last 17 years? The dollar could rise if the global fundamental scenario changes, but currently, there are no signs that this will happen.
The positioning of the red and blue lines of the indicator continues to indicate the maintenance of a bullish trend. Over the last reporting week, the number of long positions among the "Non-commercial" group increased by 18,400, while the number of shorts decreased by 11,900. Consequently, the net position increased by 30,300 contracts over the week.
On the hourly timeframe, the EUR/USD pair maintains its upward trend. The upper line of the sideways channel at 1.1400-1.1830 has effectively been tested, and we can now observe a technical pullback, as the flat remains intact on the daily timeframe. However, the 1.1750-1.1760 area is preventing the pair from moving lower, indicating that bulls may attempt another breakout from the sideways channel at any moment.
For December 24, we highlight the following trading levels: 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 (1.1710) and Kijun-sen line (1.1753). The Ichimoku indicator lines may shift throughout the day, which should be taken into account when determining trading signals. Don't forget to set Stop Loss orders to break even if the price has moved in the right direction by 15 pips. This will protect against possible losses if the signal turns out to be false.
On Wednesday, there are no significant events or reports scheduled in the Eurozone and the US, but considering the festive mood in the market, we would not be surprised to see a new attempt to break through the 1.1800-1.1830 levels.
On Wednesday, traders may consider trading from the 1.1750-1.1760 area. A bounce from this price will make long positions relevant, targeting the 1.1800-1.1830 area. A consolidation below this area will lead to a decline towards the Senkou Span B line.
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