The Downtrend Channel is Fully Activated

Summary:

The EURUSD remains under bearish pressure, plummeting below the 1.0320 threshold on Thursday, reaching its nadir since December 2022. Against the backdrop of a resurgence in dollar demand and deteriorating market sentiment, the currency pair has entered a new downtrend channel.

SELL EURUSD

Close Time

CLOSED

1.03121

Entry Price

1.00000

1.04800

1.16182 +0.00119 +0.10%

29.0

Pips

Profit

1.00000

1.02831

Exit Price

1.03121

Entry Price

1.04800

Fundamentals

The EURUSD broke below the 1.0320 level on the first trading day of the year, setting a new two-year low. Given the evolving landscape of 2025, the sluggish Eurozone economy, and the looming threat of tariffs, Euro-denominated assets may see further depreciation.

European Central Bank (ECB) policymakers have been cautious in their recent rhetoric. Over the weekend, this cautious stance continued. ECB Governing Council member Robert Holzmann, in an interview with the Austrian newspaper "Kronen Zeitung," mentioned that the ECB might still need some time before it can lower interest rates again. He noted that while some energy prices seem to be rising, inflation could also increase in other ways, such as through further depreciation of the Euro.

Meanwhile, due to optimistic U.S. economic prospects, the market anticipates a reduction in the number of rate cuts by the Fed this year. With the interest rate differential between the two currencies set to widen further, the downward momentum for the Euro is expected to continue expanding.

The latest dot plot in the Fed's Summary of Economic Projections shows policymakers collectively expect the federal funds rate to reach 3.9% by the end of 2025, higher than the 3.4% forecasted in September.

The Downtrend Channel is Fully Activated_1

Technical Analysis

Since the failed rebound attempt on December 20th last year, the EURUSD has been consolidating in a sideways pattern. The upper boundary of the range is just below 1.0450, while the lower boundary is slightly above 1.0380.

As the market has just broken through this level, it is anticipated that bears will push the EURUSD towards the next support level, which is the 1.0215-1.0230 range. The Relative Strength Index (RSI) is below the 50 neutral level. If more catalysts emerge, the downside potential could expand further.

Additionally, moving averages indicate a short-term bearish trend for the asset. The price has broken below the area between the signal lines, suggesting pressure from bears and the potential for the asset's quotes to continue falling from current levels. The potential target is a range below the 1.0223 level.

Overall, the current positive momentum is too weak to push prices through the short-term consolidation range. The medium-term outlook remains distinctly bearish. Only a breakthrough above the MA50 could mitigate the negative outlook.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.0345

Target Price: 1.0000

Stop Loss: 1.0480

Valid Until: January 17, 2025, 15:00:00

Support: 1.0290/1.0222/1.0096

Resistance: 1.0373/1.0450/1.0480

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