FOREX fundamental analysis for EUR/USD on January 7, 2025
If you want to understand the president's plans, you need to ask him himself. However, the market reacted more emotionally than it should to a Washington Post report that Donald Trump's team is considering introducing universal tariffs on critical imports for all countries. This is due to the oversaturation of the market with dollar longs, which grew at a record pace in the fourth quarter.
Against the background of this news, the EUR/USD pair jumped by 1%, US bond yields declined, and stock indexes went up. Investors concluded that Donald Trump is more concerned about inflation and the state of the economy than he is talking about it. Bloomberg research shows that if duties of 60% on Chinese imports and 10-20% on imports from other countries are imposed, the US GDP could shrink by 0.8% by 2028 in the event of retaliatory measures from Beijing and by 1.3% in the event of a global trade war.
If tariffs affect only critical imports, and not all of them, the slowdown in the global economy will not be fatal. This will have a positive impact on the pro-cyclical euro currency. The decline in US bond yields is due to the fact that derivatives have taken into account the possibility of an expansion of the Fed's monetary expansion. Without accelerating inflation, the Central Bank may continue to cut rates.
However, it is not known what exactly will happen after Trump's return to the White House. He claims that the Washington Post relies on anonymous sources that do not exist. Trump denies allegations of tariff cuts.
Initially, the new president promised to increase duties on imports from China to 60%, then mentioned 10-20% tariffs for other countries. After winning the election, he talked about 10% for China and 25% for Canada and Mexico. He plans to use the revenue from the duties to fund tax cuts, but will he be able to get Congressional support? It is also possible that lawsuits will be filed against the tariffs again, as was the case in his first term.
The markets froze in anticipation. Despite the pullback of EUR/USD after the initial jump, the reaction to the leak from the Washington Post may indicate a possible direction of movement. If tariffs are targeted, as Goldman Sachs suggests, this will support the euro. At the same time, Citigroup believes that Trump's threats are louder than their real incarnation, and in the near future this will bring investors back to the US dollar. If you focus on trading from forex levels, then the signal for sales will be a drop in the euro below $1.0375.
EUR/USD technical analysis
Yesterday, EUR/USD broke through the key resistance of the short-term downtrend of 1.0376 - 1.0362. Thus, the trend has changed to an upward one. The upper target zone of 1.0527 - 1.0500 is now the growth target.
We will consider purchases of the instrument from strong support levels, which are: the area (A) 1.0344 - 1.0335 and the area (B) 1.0298 - 1.0285. The main target of buyers will be yesterday's maximum. If yesterday's maximum is updated, then the support areas will need to be rebuilt.
Against the background of the strengthening of the US currency, the USD/CAD pair gained a foothold around 1.4349 in the Asian session on Wednesday.One of the key factors of stabilization is the report of Statistics Canada on International Trade. In November, exports increased by 2.2% after a previous increase of 1.7%, while imports increased by 1.8% compared with 0.3% previously. This is the second month in a row with positive dynamics, which contributed to the reduction of the trade deficit from $544 million to $323 million. However, exports of services decreased by 0.2% to $18.2 billion, while imports decreased by 0.1% to $18.5 billion. There was also an increase in the Ivey composite Business Activity Index (PMI) to 54.7 points from 52.3 points, indicating an improvement in economic activity.Nevertheless, investors' attention is focused on the internal political crisis. Canadian Prime Minister Justin Trudeau has announced his intention to resign after choosing a new leader of the Liberal Party.Donald Trump, commenting on this event, expressed the opinion that American citizens will no longer tolerate the huge trade deficits and subsidies supporting the Canadian economy. Ironically, he suggested that Canada's incorporation into the United States would provide the country with stability and protection from external threats. He had previously expressed his opinion about possible accession if his 25% duties on Canadian goods lead to an economic crisis.The US dollar index is holding at 108.4. The main driver of the strengthening is the growth in the number of vacancies in the labor market to 8.098 million, which is the highest since July last year. The ISM index of business activity in the service sector also rose from 52.1 to 54.1 points, confirming the stability of the US economy.On the daily chart, the USD/CAD pair is trading within an ascending channel with dynamic boundaries of 1.4550–1.4300. Technical indicators retain the buy signal, although they have weakened it somewhat due to a local correction. The range of fluctuations of the EMA on the alligator indicator is expanding, and the moving averages are diverging, while the Awesome Oscillator (AO) indicator is forming new correction bars above the zero line.USD/CAD trading recommendationsTo form long positions, it is recommended to wait for the price to consolidate above the level of 1.4400 with a target of 1.4550. The stop loss should be set at 1.4340.It is advisable to open sales after consolidating the pair below 1.4300 with a target of 1.4150 and a stop loss at 1.4360. 
FOREX fundamental analysis for EUR/USD on January 8, 2025Speculation around Donald Trump's tariff policy pushed EUR/USD to a short—term jump, reminiscent of the so-called "dead cat jump" - a technical figure characterized by a sharp but temporary increase against the trend. However, such movements quickly lose momentum, and quotes return to previous levels. Just as the world awaits the inauguration of the Republican, the currency markets are eagerly awaiting the test of parity between the euro and the dollar. According to experts from Bank of New York Mellon and Mizuho, this could happen as early as January.Since the beginning of the year, the EUR/USD currency pair has been showing volatility, which portends difficult times for traders. Despite confidence in the strength of the US dollar, any doubts lead to a rapid reduction in long positions on the greenback, which contributes to the growth of EUR/USD. Forex hedging demonstrates the growth of dollar net longs to the maximum of January 2019, which makes them extremely vulnerable to any market shocks.Sharp fluctuations in the EUR/USD exchange rate are likely to become a permanent feature of the current year. Investors will have to adapt to the unpredictable market reactions to the statements and actions of the US president. Just as oil reacted to any signals from Saudi Arabia at the beginning of the 21st century, the dollar will react to every step of the Trump administration.However, without a deterioration in macroeconomic indicators in the United States and an improvement in the situation in the Eurozone, it is difficult to expect a reversal of the downward trend in EUR/USD. European inflation, which rose to 2.4% in December, gives some hope, but strong indicators on the labor market and the service sector in the United States confirm the stability of the American economy. The probability of achieving parity between the euro and the dollar in the first quarter is 40%.Positive economic data from the United States boosted treasury yields and led to a drop in stock indexes. The futures market has increased the likelihood that the Fed will not cut rates in 2025 from 12% to 17%. However, the final clarity can only be provided by the US employment report for December. This report will help assess how long the Fed's pause in the current monetary easing cycle will be. In the meantime, the inability of the EUR/USD bulls to overcome the 1.0375 pivot level is a signal for the formation of short positions.EUR/USD technical analysisOn Wednesday, EUR/USD is trading in a corrective decline towards a short-term uptrend. The pair is currently testing the support area (A) 1.0344 - 1.0335. From here, we can consider entering long positions with the first target at 1.0386 and the second at 1.0436.If the support area (A) is broken down, the correction will continue to the support area (B) 1.0298 - 1.0285. Support (B) is the boundary of the trend. Purchases can also be viewed from this zone. 
On Tuesday, GBP/USD is strengthening against the background of the weakening of the US dollar and is currently trading around 1.2533.Recently, S&P Global presented December data on business activity in leading economies. Although the results are still below expectations, the very fact of recovery is a positive signal. In the UK, the index of business activity in the services sector rose from 50.8 to 51.1 points, which contributed to an increase in the composite indicator from 50.5 to 50.4 points. Even despite possible tax increases by the Labor government, British companies are preparing to raise prices for their goods and services, as well as reduce investments to mitigate financial losses. The pound was positively influenced by retail sales data from the British Retail Consortium (BRC), where the volume increased from -3.4% to 3.1%, which is the most significant jump since March 2024.The US dollar index, in turn, showed a noticeable decline and is now trading at 108.1. Analysts' expectations for an improvement in business activity in key sectors of the US economy have not been met: The index of business activity in the services sector, according to S&P Global, rose from 56.1 to 56.8 points, which is significantly lower than the forecast of 58.5 points. The composite indicator, which takes into account data from both the service sector and the manufacturing sector, adjusted from 54.9 to 55.4 points, which is also lower than expected at 56.6 points. These data indicate that the current growth rate of the American economy is insufficient for a sustained recovery. This may prompt the US Federal Reserve to reconsider plans to further tighten monetary policy, which is confirmed by the FedWatch indicator from the Chicago Mercantile Exchange (CME Group), according to which the probability of maintaining the current rate has increased from 88.6% to 92.5%.Technical analysis for GBP/USD for todayOn the daily chart, the GBP/USD pair is below the resistance line of the descending channel with the boundaries of 1.2550–1.2200.Technical indicators continue to give a sell signal: the fast EMAs on the alligator indicator diverge from the signal line, and the Awesome Oscillator (AO) histogram forms new descending bars in the sell zone.Trading recommendationsIt is recommended to open short positions after the price has consolidated below the support level of 1.2460 with a target of 1.2300. We will place the stop loss at 1.2520.Purchases when the price is fixed above the resistance level of 1.2580 with a target at 1.2770. In this case, we will set the stop loss at 1.2500. 
USD/CHF analysis on January 6, 2025During the Asian session, the USD/CHF pair is trading in a correction near the 0.9091 mark. The Swiss franc started the year with a slight decline against the US dollar.On Friday, the portal procure.ch He published a report on the Swiss business activity index for December, where the indicator fell to 48.4 points from the previous 48.5. However, this had little effect on market dynamics, as investors' main attention is focused on the upcoming inflation statistics, which will be published tomorrow. Experts predict a decrease in the consumer price index by 0.1% in December, which may lead to a slowdown in the annual inflation rate below 0.7%. If the forecasts are confirmed, this will be an important signal for the Swiss National Bank regarding possible changes in monetary policy. The probability of a return to negative rates this year is low, but a reduction in rates to a range of 0.25–0.00% is possible.Despite the recent strengthening of the US dollar index to 108.6, the dynamics of USD/CHF remains stable. The prospects for updating the annual highs for the dollar index this week remain. An additional growth factor may be the ISM Manufacturing Business activity index report, which showed an improvement from 48.4 to 49.3 points in December. If a similar indicator for the service sector, which will be published today, meets expectations and rises from 56.1 to 58.5 points, this may strengthen the position of the US currency.On the daily chart, the pair is approaching the resistance line of the ascending channel with dynamic boundaries of 0.9230–0.8940. Technical indicators signal continued growth: the fast EMAs on the alligator indicator are moving away from the signal line, and the awesome oscillator (AO) histogram is forming new ascending bars in the buy zone.To form long positions, it is recommended to wait for the price to consolidate above the resistance level of 0.9120 with a target of 0.9220. We will set the stop loss at 0.9050.We will consider sales when the 0.9060 support level breaks with a target of 0.8940 and a stop loss at 0.9120. 
During Monday's Asian trading session, the AUD/USD pair shows a sideways movement near the 0.6224 mark. The Australian currency remains stable, despite the growth of the US dollar last week, which allows it to remain above the minimum values of last year at 0.6200.Today, investors' attention was attracted by preliminary indicators of Australian business activity from S&P Global. The seasonally adjusted index in the services sector rose from 50.5 to 50.8 points, continuing its positive trend throughout 2024, although the growth rate remains moderate. The composite index was fixed at 50.2 points, reflecting a slight decline in private sector output. At the same time, the manufacturing sector showed a decrease in activity, which limits the potential for strengthening the Australian dollar.Future moves by the monetary authorities of China, Australia's largest trading partner, could change the situation. A positive reaction was caused by a report in the Financial Times about a possible interest rate cut by the People's Bank of China this year. This could contribute to the recovery of the Chinese economy and the expansion of imports from Australia, including coal and iron ore.At the same time, the US dollar index is showing a local correction and is currently trading at 108.6 points, not far from the annual high of 109,200. This happened after the publication of business activity data from the ISM, where the manufacturing index rose from 48.4 to 49.3 points, reaching its highest level since March last year.On the daily chart, the AUD/USD pair is moving within a descending channel with boundaries of 0.6280–0.6100. Technical indicators give a weak sell signal: the fast EMAs on the alligator remain pointing down, and the histogram of the awesome oscillator indicator (AO) is still in the sell zone.To form short positions, it is recommended to wait for the price to consolidate below the support level of 0.6180 with a target of 0.6040. We will set the stop loss at 0.6250.We will consider purchases after the pair has consolidated above the resistance level of 0.6270 with a target of 0.6400 and a stop loss at 0.6210. 
FOREX Fundamental analysis for EUR/USD on January 6, 2025When the US dollar is booming, the euro is falling. The EUR/USD pair dropped to two-year lows, reaching the first of the two previously set short targets of 1.03. This happened against the background of a massive flight of capital into safe assets after the terrorist attacks in New Orleans and Las Vegas. Not only did the traditional New Year's Eve rally in the US stock markets fail, but the surge in demand for safety forced the bulls to retreat.Societe Generale analysts believe that with continued capital inflows to the United States and the stability of the American economy, the dollar will continue to strengthen. According to the MLIV Pulse survey, 51% of respondents expect the dollar to rise in 2025, while only 27% predict its weakening. Experts from Rabobank, Wells Fargo and Investec predict EUR/USD parity in the second quarter, and Danske Bank — in the medium term.The "bearish" market sentiment is related to expectations that fiscal stimulus and deregulation initiated by Donald Trump will accelerate economic growth in the United States and increase inflation. At the same time, the introduction of customs tariffs will slow down the Eurozone economy and lead to an influx of cheap Chinese goods, which may cause deflationary risks in Europe.The futures market predicts a reduction in the Fed's federal funds rate by only 43 basis points in 2025, while the ECB's deposit rates may decrease by 108 bps. The different rate of monetary expansion is a strong argument in favor of EUR/USD falling to parity or lower.Among 46 Financial Times experts, 46% believe that the European Central Bank was late in cutting rates in 2024. Another 43% believe that monetary policy is moving in the right direction. The consensus forecast indicates a reduction in the ECB deposit rate by 100 basis points to 2%. Only 19% of respondents expect the cycle of monetary easing to continue in 2026, while the majority believe it will end in 2025.The market narrative is clear — it remains to wait for its implementation. According to Richmond Fed President Thomas Barkin, Trump's policy may accelerate inflation, but if it slows down economic growth, the administration may reconsider its position. This creates the prerequisites for a tug of war for EUR/USD.The December US labor market report will be the main forex indicator for January. Reuters experts predict employment growth of 150,000 and the unemployment rate will remain at 4.2%. Although markets are confident about the Fed's January pause, stronger data may increase the likelihood that the pause will last into March, which will support the dollar.In the context of waiting for key data and uncertainty regarding Trump's policy, EUR/USD may consolidate. A rebound of the pair from the resistance levels of 1.0335 and 1.0365 or a drop below 1.0255 should be used to form short positions.EUR/USD technical analysisEUR/USD reached the "golden zone" of 1.0261 - 1.0252 last week. However, the support area was held by buyers, as a result of which the pair went into an upward correction to a short-term downtrend. As part of the correction, EUR/USD quotes reached the resistance area (A) of 1.0325 - 1.0316 today. Near this zone, we can consider new sales of the instrument with the first target at 1.0275 and the second at 1.0224.If the resistance area (A) is broken up during trading, the correction will continue to the resistance area (B) 1.0376 - 1.0362. From the resistance area (B), we will also consider selling with the main target at 1.0224. 
With the start of weekly trading, GBP/USD continues to trade in a narrow range of 1.2573–1.2490 near 1.2581. The low volatility of currency pairs during the holiday period and weak macroeconomic indicators in the UK are holding back the pound's attempts to regain lost ground.According to the National Statistical Service of Great Britain (ONS), the country's economy showed zero growth in the third quarter, which increased the risks of recession, although analysts had expected a decrease of 0.1%. In addition, industrial production decreased by 0.7% in October, and the composite business activity index dropped to 50.5 points, reflecting business concerns about a 40 billion pound tax increase initiated by the government. In such circumstances, hopes for a positive effect from the political stability caused by a strong parliamentary majority were not justified.These factors also limit the Bank of England's ability to continue lowering the interest rate from the current level of 4.75%. In August, the regulator began easing policy for the first time since 2020, lowering the rate from 5.25%, but further steps have been postponed. The head of the Bank of England, Andrew Bailey, supported the preservation of current parameters, which was supported by five more members of the Monetary Policy Committee, while three others supported a 25 basis point rate cut, citing weakening demand and the labor market. Despite this, the decrease in inflation to 1.7% in September indicates the partial effectiveness of the measures taken, although the rising cost of electricity has again pushed inflation above the target 2.0%.Against this background, the United States is showing more stable economic dynamics. Despite the slowdown in the dollar index, which is trending sideways around 108.00, the outlook for the currency is positive. A possible trigger for the changes will be the economic policy of Donald Trump, who may impose import duties after his inauguration on January 20. If this happens, the British economy will be hit, given the significant exports of cars, equipment, chemicals and pharmaceuticals to the United States.In such circumstances, the pound's inability to show sustained growth increases the likelihood of a continuation of the GBP/USD downtrend in the coming months.Technical analysis for GBP/USD for todayOn the daily chart, the pair is correcting, remaining within the descending channel with the boundaries of 1.2660–1.2100. Attempts to update the autumn lows were unsuccessful.Technical indicators confirm the sell signal: the EMA lines of the alligator indicator maintain a significant distance from the signal line, and the awesome oscillator (AO) indicator forms descending bars in the sell zone.Trading recommendations- Short positions: open when the price is fixed below the 1.2500 level with a target of 1.2350. The stop loss is 1.2600.- Long positions: open after the breakdown of the 1.2610 level with a target of 1.2770. The stop loss is 1.2500. 
FOREX Fundamental analysis for EUR/USD on December 30, 2024The US dollar is moving towards the end of the year with the best performance since 2015, having strengthened by more than 7% against key global forex currency indices. The main driver of this rally was the steady growth of the US economy, which allowed the Federal Reserve to minimize the depth of the monetary policy easing cycle. As a result, interest rates in the United States will remain higher than in other regions, including the Eurozone, which creates the prerequisites for a further decline in the EUR/USD pair to parity.Central banks usually act synchronously, focusing on the leader, which is usually the Fed. However, in conditions of varying rates of economic growth, following the Federal Reserve can have negative consequences for less stable economies. The United States, thanks to fiscal incentives and rapid productivity growth amid the introduction of artificial intelligence technologies, has withstood the toughest policy tightening cycle in recent decades. In contrast, the Eurozone economy turned out to be less prepared for such conditions.Europe still has not reached its pre-crisis GDP growth trajectory. This is due to insufficient fiscal support, lower labor productivity, and the consequences of the geopolitical conflict in Ukraine, including the energy crisis. In the context of high interest rates, the Eurozone economy is showing weak adaptation, and in the second half of the year, its GDP is likely to show zero growth.The ECB's attempt to continue following the Fed, which is planning a pause in policy easing in early 2024, could prove disastrous. For example, the head of the National Bank of Austria, Robert Holzmann, believes that the ECB will need more time to lower rates due to rising energy prices and the weakening of the euro, which increases inflationary pressures.In such circumstances, the IMF's forecasts for 2025 for the eurozone, which are already noticeably inferior to those of the United States, risk not being justified. An additional pressure factor is Donald Trump's policy, which includes fiscal incentives to accelerate US GDP growth and trade tariffs aimed at weakening the economies of the partners.The only chance for the ECB to avoid deepening the gap may be a faster rate cut compared to the Fed. However, over the next 1-3 months, this is likely to lead to a fall in the EUR/USD pair to parity.The main risk for such a scenario remains possible difficulties with the implementation of Donald Trump's election program. Financial markets, based on expectations from the so-called "red wave", have already incorporated most of the positive scenarios into quotes. If these expectations are not met, a pullback of the EUR/USD pair may follow, which will become a new selling opportunity towards the 1.03 and 1.00 levels.