Analysis EUR/USD 5M

The EUR/USD currency pair traded with minimal volatility on Tuesday. The Christmas and New Year holidays are ongoing worldwide, so there is virtually no movement in the FX market. The macroeconomic and fundamental backdrop is absent. Therefore, strong trend moves are unlikely before year-end. This week, the Eurozone and US event calendars are empty.

Technically, an upward tendency persists on the hourly timeframe despite the trendline being broken. The trendline was breached, but the price failed to settle below the 1.1750–1.1760 area and the critical line. Thus, the upward trend remains. However, stronger and more interesting moves can be expected only next week, once the market has thoroughly enjoyed the holidays and weekends.

On the 5-minute timeframe, one trading signal was generated on Tuesday; you can judge its quality yourself. The price bounced off the 1.1750–1.1760 area only to fail to move up even one pip. Formally, there was no bounce. Perhaps it will occur today, but even a 20–30-pip move in the desired direction is hard to count on now.

COT Report

The latest COT report is dated December 16. The illustration above clearly shows that the net position of non-commercial traders has been bullish for a long time; bears briefly 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 US president, only the dollar has been falling. We cannot say with 100% probability that the dollar's decline will continue, but current world developments point toward this scenario. The red and blue lines are diverging, indicating powerful bullish dominance.

We still see no fundamental factors supporting the euro's strengthening, while there remain sufficient factors for the dollar's decline. The global downtrend for the dollar persists, but what does the past 17 years' price action matter now? Over the past three years, only the euro has been rising, and that is also a trend.

The positions of the indicator's red and blue lines continue to indicate the preservation and strengthening of a bullish trend. Over the last reporting week, the number of longs in the "Non-commercial" group rose by 8,900 and shorts by 2,700. Accordingly, the net position increased by 6,200 contracts over the week.

Analysis EUR/USD 1H

On the hourly timeframe, the EUR/USD pair maintains an upward trend. The upper line of the sideways channel 1.1400–1.1830 has been tested twice, so in the near term, we may see a technical decline, as the flat persists on the daily timeframe. However, the 1.1750–1.1760 area prevents the pair from falling below it, and the market currently lacks the strength for moves greater than 30 pips per day.

For December 31, 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 Senkou Span B (1.1710) and Kijun-sen (1.1755). Ichimoku indicator lines may shift throughout the day and should be considered when determining trading signals. Remember to move the stop loss to breakeven if the price moves 15 pips in the correct direction. This will protect against potential losses if the signal proves false.

No important events or releases are scheduled in the Eurozone or the US on Wednesday. Movements may again be weak and non-trending during the day.

Trading Recommendations:

On Wednesday, traders can trade from the 1.1750–1.1760 area. A bounce from this area will make long positions relevant with targets in the 1.1800–1.1830 area. A consolidation below it will lead to a decline targeting the Senkou Span B line. But current volatility may be insufficient even for a minimal move.

Explanations of the illustrations:

• Support and resistance levels – thick red lines around 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.
• Extreme 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 COT charts – the size of the net position of each category of traders.