EURUSD-A Big 24 Hours for Traders!
FX market volatility is back at the start of January 2025 aided by a constant source of headlines from President Trump and his team surrounding the size of potential trade tariffs he may decide to eventually impose on all goods entering the United States.
The EURUSD currency pair has been a leading participant in the volatile moves, touching a low of 1.0177 on January 13th, followed by a high on Monday (Jan 27th) at 1.0533, before reversing these gains to touch a low of 1.0414 on Tuesday.
This latest EURUSD reversal to the downside was again generated by President Trump, who stepped in with a comment that he didn’t think starting with a global tariff rate of 2.5%, which was something incoming Treasury Secretary Bessent was reported to favour, was enough and that he wanted the tariff rate to be ‘much bigger’.
Looking forward: EURUSD Implications
It’s an important 24 hours for EURUSD traders, with the Federal Reserve (Fed) Interest Rate Decision tonight at 1900 GMT, where a pause to interest rate cuts is fully expected, followed by the Fed Press Conference which starts at 1930 GMT. The ECB Interest Rate Decision is tomorrow at 1315 GMT, where a 25bps (0.25%) cut is fully expected, with the Press Conference starting at 1345 GMT.
The Fed and ECB press conferences may well be what generates the volatility for EURUSD prices. FX traders are unsure what Fed Chairman Powell will say about the potential for an interest rate cut in the first half of 2024, as well as, whether a recent slowing in underlying inflation could lead to more than just 2 25bps (0.25%) cuts for the full year that were mentioned at the December meeting.
At the ECB press conference, traders will be hoping for a sign from President Lagarde that further rate cuts are likely, potentially as soon as the next meeting in early March. If she suggests there is any potential for a pause to assess more inflation and growth data, it could cause a big shock to EURUSD prices.
With that in mind, knowing the potential key EURUSD chart levels to consider in advance can be helpful.
Looking at EURUSD Technicals:
It has so far been a strong recovery from 1.0177, the January 13th low, but there is not yet sufficient evidence to suggest it is buyers who have gained the upper hand. As such, price activity must be watched in reaction to this week’s events to help us gauge next directional themes.
Potential Resistance Focus:
Having seen the latest attempt at upside strength fail and then sell-off from 1.0533 which is the January 27th high, this may be the first resistance level to be monitored if upside momentum again develops this week.
However, as the chart above shows, even if successful closing breaks of this area are seen, there appears to be a stronger resistance range between 1.0574/1.0630, which is a combination of the 38.2% Fibonacci retracement of September 2024 to January 2025 weakness, and the December 6th rejection high.
It may well prove that closing breaks of this area are required, if EURUSD is to see possibilities of a more sustained phase of price strength towards higher levels.
Potential Support Focus:
While the 1.0574/1.0630 resistance area remains intact, it could be argued the longer term negative pattern of lower highs and lower lows since the September 25th extreme at 1.1214 still reflects the possible directional bias.
That said, within any increased downside volatility over coming sessions, breaks of support are needed to introduce the possibility of further declines.
With that in mind, the first support focus may be 1.0399, which is the 38.2% retracement of January strength. Then if this level was to be breached, the next support level could be the Bollinger mid average at 1.0351. A break and close below the Bollinger mid-average could open up retests of the 1.0177 low from January 13th.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
The EURUSD currency pair has been a leading participant in the volatile moves, touching a low of 1.0177 on January 13th, followed by a high on Monday (Jan 27th) at 1.0533, before reversing these gains to touch a low of 1.0414 on Tuesday.
This latest EURUSD reversal to the downside was again generated by President Trump, who stepped in with a comment that he didn’t think starting with a global tariff rate of 2.5%, which was something incoming Treasury Secretary Bessent was reported to favour, was enough and that he wanted the tariff rate to be ‘much bigger’.
Looking forward: EURUSD Implications
It’s an important 24 hours for EURUSD traders, with the Federal Reserve (Fed) Interest Rate Decision tonight at 1900 GMT, where a pause to interest rate cuts is fully expected, followed by the Fed Press Conference which starts at 1930 GMT. The ECB Interest Rate Decision is tomorrow at 1315 GMT, where a 25bps (0.25%) cut is fully expected, with the Press Conference starting at 1345 GMT.
The Fed and ECB press conferences may well be what generates the volatility for EURUSD prices. FX traders are unsure what Fed Chairman Powell will say about the potential for an interest rate cut in the first half of 2024, as well as, whether a recent slowing in underlying inflation could lead to more than just 2 25bps (0.25%) cuts for the full year that were mentioned at the December meeting.
At the ECB press conference, traders will be hoping for a sign from President Lagarde that further rate cuts are likely, potentially as soon as the next meeting in early March. If she suggests there is any potential for a pause to assess more inflation and growth data, it could cause a big shock to EURUSD prices.
With that in mind, knowing the potential key EURUSD chart levels to consider in advance can be helpful.
Looking at EURUSD Technicals:
It has so far been a strong recovery from 1.0177, the January 13th low, but there is not yet sufficient evidence to suggest it is buyers who have gained the upper hand. As such, price activity must be watched in reaction to this week’s events to help us gauge next directional themes.
Potential Resistance Focus:
Having seen the latest attempt at upside strength fail and then sell-off from 1.0533 which is the January 27th high, this may be the first resistance level to be monitored if upside momentum again develops this week.
However, as the chart above shows, even if successful closing breaks of this area are seen, there appears to be a stronger resistance range between 1.0574/1.0630, which is a combination of the 38.2% Fibonacci retracement of September 2024 to January 2025 weakness, and the December 6th rejection high.
It may well prove that closing breaks of this area are required, if EURUSD is to see possibilities of a more sustained phase of price strength towards higher levels.
Potential Support Focus:
While the 1.0574/1.0630 resistance area remains intact, it could be argued the longer term negative pattern of lower highs and lower lows since the September 25th extreme at 1.1214 still reflects the possible directional bias.
That said, within any increased downside volatility over coming sessions, breaks of support are needed to introduce the possibility of further declines.
With that in mind, the first support focus may be 1.0399, which is the 38.2% retracement of January strength. Then if this level was to be breached, the next support level could be the Bollinger mid average at 1.0351. A break and close below the Bollinger mid-average could open up retests of the 1.0177 low from January 13th.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.