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EUR/USD – 1H.
On December 31, the EUR/USD pair performed a fall and consolidation under the upward trend line. Thus, the mood of traders changed to "bearish". However, on Monday morning, the pair's quotes performed a reversal in favor of the euro and began a new growth process in the direction of the level of 1.2272. A rebound from this level will again work in favor of the US currency and the resumption of the fall in the direction of the corrective level of 261.8% (1.2201). The holidays are over, and it's time to return to the usual channel of trade. There was no important news during the holidays. In the European Union – peace. In America, several reports related to the laws adopted at the level of Congress and the Senate. For example, on January 1, senators, following congressmen, overcame Donald Trump's veto on the defense budget. However, traders are unlikely to react to any bill that is passed in the US. The main thing is different. The European currency continues to grow, and the US dollar to fall. This was observed in the last days of 2020, and the same is observed in the first days of 2021. Thus, despite the closing of the pair's quotes under the trend line, the growth can be resumed. As you can see, bull traders continue to trade actively.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the US dollar and a slight drop, but overall growth remains. The upward trend line continues to characterize the mood of traders as "bullish". Thus, the growth process can be continued in the direction of the corrective level of 200.0% (1.2353). Fixing the pair's rate under the trend line will work in favor of the US currency and some fall in the direction of the Fibo 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 performs 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 December 31, there was no single important news or report in the United States and the European Union. There was no information background. In the US Congress and Senate, interesting events were happening, where deputies adopted several important documents and budgets.
News calendar for the United States and the European Union:
EU - index of business activity in the manufacturing sector (09:00 GMT).
US - index of business activity in the manufacturing sector (14:45 GMT).
On January 4, business activity reports will be released in America and the European Union, which are unlikely to arouse strong interest among traders.
COT (Commitments of Traders) report:
The latest COT report from December 15 showed a sharp increase in the number of open short contracts by the "Non-commercial" category of traders, which is considered the most important. Before that, speculators had been building up long contracts for four weeks. And now the new COT report, which was released only today, again shows the build-up of long contracts by speculators. This means that they are once again beginning to believe in the European currency, which has only been growing in recent months. The total number of long contracts focused on the hands of major players is 224 thousand, which is three times more than the number of short contracts. Since speculators do not currently reduce the number of long contracts and do not increase the number of short ones, I conclude that the euro may grow further. However, let me remind you that each COT report is released three days late, and also describes changes that have already occurred.
EUR/ USD forecast and recommendations for traders:
On Monday, I recommend selling the euro in case of a rebound from the level of 323.6% - 1.2308 (or 1.2272) on the hourly chart with a target of 1.2201. New purchases of the pair can be opened with targets of 1.2308 and 1.2353 when the quotes are fixed above the level of 1.2272 on the hourly chart.
Terms:
"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.
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