By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
EURUSD is falling. It looks like investors aren’t very interested in the USD as a “safe haven” asset since the country started providing some positive signals.
So, the Government Shutdown in the USA is either over or put on hold, no one can say for sure. Last Friday, January 25th, the US President Donald Trump said that he would reopen the Federal government for the next three weeks until February 15th while the negotiations over how to secure the American-Mexican border continued.
It is known that the border issue was the only aspect, which hadn’t been agreed on. However, the wall is very important for Trump and his office: he already said that the issue had to be solved until February 15th, otherwise he would be forced to appeal to the constitution and declare a national emergency. Indeed, it is a possibility, but only if worse comes to worst.
This entire week will be very interesting for the USD. The two-day meeting of the US Federal Reserve will be over on Wednesday and the regulator is expected to announce its balance. There is an opinion that the Fed is selling its assets slower than it possibly could and investors seem to be more sensitive to this than to the rate changes. It looks like the regulator fell under influence of the White House and decided to withdraw money for the system in a softer way than it was expected. Earlier, market players expected the Fed to be more aggressive in February-April.
Looking at the H4 chart, one can see that EURUSD is again trading inside the rising correctional channel, but the question is for how long. Is it a temporary pullback inside a new mid-term descending impulse or a continuation of the ascending correction? Despite breaking the support line of the correctional channel, the price returned into it. However, the convergence on MACD saw it coming. By now, the correctional impulse to the upside has reached the retracement of 50.0%, which happens quite often. If a new descending impulse manages to break the support line at 1.1335, fix below it and then test the fractal support at 1.1289, the price will form a mid-term wave to the downside. The first target of this wave may be the key low at 1.1215.
As we can see in the H1 chart, the pair is trading inside the “overbought zone”, which may indicate a new short-term pullback. Another signal for further decline is “Black cross” on Stochastic Oscillator. The target of this decline is the support line at 1.1335. At the same time, one shouldn’t exclude a possible rebound from this area towards the retracement of 61.8% at 1.1463.
Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.