empty
14.01.2025 03:14 AM
EUR/USD Overview: January 14 – The Euro Continues Its Decline Toward Parity

This image is no longer relevant

On Monday, the EUR/USD currency pair continued to trade lower—what else could it do? This situation reminds us of last year when we frequently noted that the euro was overbought and unjustifiably expensive. While predicting the exact timing of a new trend is always challenging, we cautioned that it might begin after September 18. The trend ultimately started on September 25, so the current decline of the euro does not come as a surprise to us. We've been discussing this scenario throughout 2024. It's important to recognize that prices can change direction regardless of the presence or absence of fundamental or macroeconomic factors; we refer specifically to local influences. When a clear trend is visible to all market participants, why would anyone choose to buy an asset that is consistently losing value?

It's important to remember that a currency pair's exchange rate is determined solely by supply and demand, rather than by macroeconomic reports or Federal Reserve speeches. The market forms a long-term opinion that aligns with the prevailing trend, based on global fundamental factors such as Fed monetary policy, economic crises, and geopolitical conflicts. This opinion influences trading and leads to long-term trends. Although local events and reports can affect trader sentiment over the course of a single day, they do not dictate the overall trend.

Currently, the euro may continue its decline against the dollar. While we cannot predict the exact level at which the pair will stabilize, there is no indication that the current trend is concluding. Looking at the weekly timeframe, it appears likely that the euro could drop below $0.95, potentially even lower. Although this possibility may seem hard to believe to some, just a few months ago, few anticipated a drop of 1,000 pips, and no analysts predicted a fall to parity.

The target zone we have mentioned several times has now been reached. The price has entered the range between 1.0000 and 1.0200, which we identified as the objective. Notably, no significant news was required for the euro to continue its decline on Monday. In the near future, a new upward correction may begin, but trading during corrections is generally not advisable. While we won't discourage anyone from attempting it, as long as the trend remains— even on the daily timeframe—considering long positions is not logical. This week, only the U.S. inflation report has the potential to bolster the euro. However, it's important to remember that no one can predict when market makers will start locking in profits on their short positions or how far they'll allow those positions to run.

This image is no longer relevant

The average volatility of the EUR/USD currency pair over the last five trading days as of January 14 is 78 pips, which is classified as "average." On Tuesday, we anticipate that the pair will move between the levels of 1.0136 and 1.0292. The higher linear regression channel remains downward, indicating a continuation of the global downtrend. Recently, the CCI indicator entered the oversold zone twice and formed two bullish divergences; however, these signals only suggest a potential correction.

Nearest Support Levels

  • S1: 1.0193
  • S2: 1.0132

Nearest Resistance Levels

  • R1: 1.0254
  • R2: 1.0315
  • R3: 1.0376

Trading Recommendations:

The EUR/USD pair is likely to continue its downtrend. In recent months, we have emphasized the expectation of further declines in the euro in the medium term. We firmly support the overall bearish direction and do not believe that this trend has ended. There is a significant likelihood that the market has already priced in all future Fed rate cuts. As a result, the dollar currently lacks medium-term reasons for a decline, apart from purely technical corrections.

Short positions remain relevant, with targets at 1.0193 and 1.0136. For those trading based purely on technical analysis, long positions can be considered if the price moves above the moving average, targeting 1.0437. However, any upward movement should be classified at this moment as a correction.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Recent gas market developments

The gas market saw an uptick following the announcement by US President Donald Trump of a state of emergency in the US oil and gas sector, along with his approval

Miroslaw Bawulski 11:41 2025-01-21 UTC+2

USD/JPY: Analysis and Forecast

The current position of the Japanese yen reflects a complex balance between the positive sentiment in equity markets and expectations of interest rate hikes by the Bank of Japan

Irina Yanina 11:37 2025-01-21 UTC+2

USD/CAD: Donald Trump's Tariff Statements for Canada Shake the Market

The USD/CAD pair shows a correction after significant intraday growth. The Canadian dollar weakened under selling pressure after U.S. President Donald Trump announced plans to impose 25% tariffs on imports

Irina Yanina 11:29 2025-01-21 UTC+2

Overview of the GBP/USD Pair on January 21: The Pound Clings to a Straw

The GBP/USD currency pair experienced growth on Monday, coinciding with the start of the U.S. trading session. It's important to note that this growth did not stem from any specific

Paolo Greco 05:19 2025-01-21 UTC+2

Overview of the EUR/USD Pair on January 21: Trump's Inauguration Changes Nothing

The EUR/USD pair traded relatively calmly on Monday, at least during the first half of the day. However, with the opening of the U.S. session, volatility surged sharply. The subsequent

Paolo Greco 05:19 2025-01-21 UTC+2

EUR/USD: The Illusion Bubble – Dollar Weakens Amid Strengthened Risk Sentiment

Markets are optimistic ahead of Donald Trump's inauguration. Increased risk appetite has allowed EUR/USD buyers to recover from Friday's lows, with the pair now trading above the 1.0300 target

Irina Manzenko 23:40 2025-01-20 UTC+2

USD/CAD: Analysis and Forecast

The USD/CAD pair retreated slightly after reaching its highest level since March 2020 during the Asian session on Monday, amid a modestly weaker US dollar. However, this pullback

Irina Yanina 13:23 2025-01-20 UTC+2

The Market Finds Shelter

The S&P 500 achieved its best weekly performance since the November U.S. presidential election, just before Donald Trump's inauguration. Initially, investors worried that his protectionist policies could negatively impact

Marek Petkovich 08:02 2025-01-20 UTC+2

EUR/USD Weekly Preview: Trump's Inauguration, Lagarde's Speech, ZEW and PMI Indices

The economic calendar for the upcoming week is not packed with significant events. Key reports for EUR/USD (Nonfarm Payrolls, CPI, PPI) were released in the first half of January, while

Irina Manzenko 05:24 2025-01-20 UTC+2

Overview of the GBP/USD Pair on January 20: The Fairy Tale Is Over, but There Was Never a Fairy Tale

On Friday, the GBP/USD currency pair experienced another decline. Among the macroeconomic data released that day, one notable highlight was yet another disappointing data from the UK. Although

Paolo Greco 04:46 2025-01-20 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.