Created on January 02, 2025

Bạn đang xem: EUR/USD Signal Today – 02/01: Euro Weakens (Chart)

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0250.
• Add a stop-loss at 1.0425.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0360 and a take-profit at 1.0425.
• Add a stop-loss at 1.0250.

The EUR/USD pair was on the verge of a bearish breakout as traders moved to a risk-off sentiment ahead of Donald Trump’s inauguration. On Thursday morning, the pair slipped to a low of 1.0353, a few pips above last year’s low.

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The EUR/USD retreated as the US dollar index and bond yields continued rising. This price action was mainly due to rising inflation risks in the United States as Donald Trump prepares to take office.

Trump has made many promises, many of which will be inflationary over time. He has pledged to implement large tariffs, leading to higher prices almost instantly since the US imports most of its items.

Trump has also made migration a major concern issue and vowed to deport millions of undocumented migrants. In theory, such deportations would lead to higher inflation because migrants work a lot in areas like agriculture and construction. Still, his odds of success are low because of the costs, logistics, and legal issues involved in immigration.

Therefore, these issues may force the Fed to diverge from the European Central Bank (ECB). It has already hinted that it will deliver just two rate cuts in 2025, down from the previous guidance of four.

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The ECB, on the other hand, is between a rock and a hard place. Data shows that the bloc’s economy is slowing, raising the need for more cuts. Also, more numbers show that inflation has started to peak up. For example, this week’s data showed that Spanish inflation rose to 2.8% in December, the highest point in months.

EUR/USD Technical Analysis

The daily chart shows that the EUR/USD exchange rate has been in a strong downtrend after peaking at 1.1200 in September last year. It has moved below the important support level at 1.0600. This was a key level because it was the highest swing on December 6 and the lowest swing on April 6 last year.

The MACD indicator has remained below the zero line, while the Relative Strength Index is below the neutral point at 50. Therefore, the path of the least resistance for the pair is downwards, with the next target being at 1.0250. This view will become invalid if the double-bottom pattern at 1.0330 works out well.

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