empty
16.01.2025 04:19 AM
Trading Recommendations and Analysis for EUR/USD on January 16: Another Logical Collapse

EUR/USD 5-Minute Analysis

This image is no longer relevant

On Wednesday, the EUR/USD currency pair initially traded upward for most of the day but later lost all its gains as the euro declined significantly. In our fundamental analysis, we highlighted the mixed nature of the U.S. inflation report. The market's initial reaction was to sell the dollar, which seemed somewhat irrational. While the headline inflation figure met expectations, U.S. inflation still increased, indicating that the Federal Reserve might not lower rates as much as the two modest rate cuts anticipated in 2025. This situation is further complicated by Donald Trump's upcoming presidency, which may bring various tariffs that could escalate global inflation.

The evening decline in the euro was more understandable. First, the global downtrend remains in effect. Second, the fundamental and macroeconomic conditions continue to favor the dollar. Third, the price corrected and rebounded precisely from the Senkou Span B line. Even on the previous day, there were reasons to consider buying the dollar again, despite the mixed inflation report.

Trading signals on Wednesday were excellent. During the U.S. session, the currency pair tested the 1.0340 level and the Senkou Span B line, rebounding sharply. This was followed by a decline that again tested this critical line, from which the price also bounced. As a result, traders had the opportunity to open two trades that yielded profit. A long position can even be maintained.

COT Report

This image is no longer relevant

The latest Commitment of Traders (COT) report, dated December 31, indicates that non-commercial traders maintain a bullish net position. However, bears have recently gained the upper hand. Two months ago, the number of short positions among professional traders surged, resulting in a negative net position for the first time in a long while. This change suggests that the euro is being sold more frequently than it is being bought.

We have yet to identify any fundamental drivers for euro strength. From a technical perspective, the EUR/USD pair has been consolidating for quite some time. On the weekly timeframe, it has traded between 1.0448 and 1.1274 since December 2022. The breach of the 1.0448 level has opened the door for further declines.

Additionally, the COT data shows that the red and blue lines have crossed, signaling a bearish market sentiment. In the last reporting week, long positions among non-commercial traders increased by 9,300, while short positions rose by 10,400, resulting in a reduction of the net position by 1,100.

EUR/USD 1-Hour Analysis

This image is no longer relevant

On the hourly chart, the currency pair has resumed its downtrend, which has persisted for over three months. We believe this decline will continue in the medium term. The Fed might cut interest rates just 1–2 times in 2025, indicating a more hawkish stance than the market initially expected. This factor, among others, will continue to support the U.S. dollar. The bearish sentiment remains intact below the Ichimoku indicator lines, even in the short term.

For trading on January 16, the following levels are highlighted: 1.0124, 1.0195, 1.0269, 1.0340–1.0366, 1.0461, 1.0524, 1.0585, 1.0658–1.0669, 1.0757, 1.0797, and 1.0843, as well as the Senkou Span B (1.0342) and Kijun-sen (1.0267) lines. Please note that the Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals. Remember to set a Stop Loss at breakeven if the price moves 15 pips in your favor, to protect against potential losses from false signals.

On Thursday, the Eurozone will release a secondary report on German inflation, while the U.S. is set to publish slightly more significant retail sales data and equally secondary jobless claims. Therefore, we do not expect strong price movements today. Below the Senkou Span B line, even a short-term uptrend remains unlikely.

Illustration Explanations:

  • Support and Resistance Levels (thick red lines): Thick red lines indicate where movement may come to an end. Please note that these lines are not sources of trading signals.
  • Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the 4-hour timeframe to the hourly timeframe. These are strong lines.
  • Extreme Levels (thin red lines): Thin red lines where the price has previously bounced. These serve as sources of trading signals.
  • Yellow Lines: Trendlines, trend channels, or any other technical patterns.
  • Indicator 1 on COT Charts: Represents the net position size for each category of traders.
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
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
    JOIN CONTEST

Recommended Stories

How to Trade the GBP/USD Pair on January 30? Simple Tips and Trade Analysis for Beginners

Analysis of Wednesday's Trades 1H Chart of GBP/USD The GBP/USD pair traded very sluggishly on Wednesday, with markets feeling cautious about any unexpected statements from Jerome Powell. However, Powell essentially

Paolo Greco 06:49 2025-01-30 UTC+2

How to Trade the EUR/USD Pair on January 30? Simple Tips and Trade Analysis for Beginners

Analysis of Wednesday's Trades 1H Chart of EUR/USD On Wednesday, the EUR/USD currency pair did not exhibit the expected movements. Volatility remained low throughout the day, and following the FOMC

Paolo Greco 06:49 2025-01-30 UTC+2

Trading Recommendations and Analysis for GBP/USD on January 30: The Dollar's Unsuccessful Blitzkrieg Attempt

The GBP/USD currency pair traded cautiously on Wednesday, as the market was reluctant to take risks ahead of the Federal Reserve meeting and Jerome Powell's remarks. We will analyze these

Paolo Greco 02:24 2025-01-30 UTC+2

Trading Recommendations and Analysis for EUR/USD on January 30: The Euro Prepares for a Decline

The EUR/USD currency pair exhibited low volatility on Wednesday and has not yet determined its direction of movement. We are not considering the fluctuations that occurred following the announcement

Paolo Greco 02:24 2025-01-30 UTC+2

GBP/USD: Trading Plan for the U.S. Session on January 29th (Review of Morning Trades)

In my morning forecast, I highlighted 1.2415 as a key level for market entry. Let's examine the 5-minute chart to analyze what happened. The pair dropped to 1.2429

Miroslaw Bawulski 18:51 2025-01-29 UTC+2

EUR/USD: Trading Plan for the U.S. Session on January 29th (Review of Morning Trades)

In my morning forecast, I highlighted the 1.0415 level as a key point for making trading decisions. Let's examine the 5-minute chart to analyze what happened. A decline and false

Miroslaw Bawulski 18:47 2025-01-29 UTC+2

GBP/USD: Trading Plan for the U.S. Session on January 28th (Review of Morning Trades)

In my morning forecast, I focused on the 1.2429 level and planned to make market entry decisions based on it. Let's look at the 5-minute chart and analyze what happened

Miroslaw Bawulski 13:02 2025-01-28 UTC+2

EUR/USD: Trading Plan for the U.S. Session on January 28th (Analysis of Morning Trades)

In my morning forecast, I highlighted the 1.0415 level and planned to make trading decisions around it. Let's review the 5-minute chart to see what happened. A decline occurred

Miroslaw Bawulski 12:51 2025-01-28 UTC+2

How to Trade the EUR/USD Pair on January 28? Simple Tips and Trade Analysis for Beginners

Analysis of Monday's Trades 1H Chart of EUR/USD On Monday, the EUR/USD currency pair exhibited mixed movements. Initially, the price dropped before rising again, only to experience a more significant

Paolo Greco 06:32 2025-01-28 UTC+2

How to Trade the GBP/USD Pair on January 28? Simple Tips and Trade Analysis for Beginners

Analysis of Monday's Trades 1H Chart of GBP/USD On Monday, the GBP/USD pair exhibited mixed movements due to a lack of macroeconomic background and fundamental economic data. The British pound

Paolo Greco 06:32 2025-01-28 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.