The EUR/USD pair reversed in favor of the European currency this week and began a growth phase. The current rise is so strong that within a week it has almost fully offset the decline of the previous three weeks. During the explosive growth on Monday and Tuesday, a new bullish imbalance was formed, which is exactly what I had expected. And yesterday, the price reacted to it, meaning a new bullish signal was generated. Traders could once again open long positions, which can now be kept open until signs of a bearish attack appear.

Without a doubt, Donald Trump alone should be credited for the dollar's decline this week. Traders paid no attention at all to economic reports during the week. The peak of this disregard was the release of strong third-quarter GDP data, which did nothing to help the U.S. dollar yesterday. Donald Trump first imposed trade tariffs on EU countries and then canceled them, but traders saw only negative implications in both events. In my view, they interpreted the situation correctly, because such back-and-forth means only one thing: the decisions of the U.S. president (of the country with the largest economy in the world, no less) are worth nothing. Today Trump may impose tariffs, tomorrow he may cancel them. Today Trump may declare his readiness to seize Greenland by force, and tomorrow he may change his mind. Markets cannot understand what to expect from Trump or what the consequences of his actions will be for the economy. Therefore, whenever possible, they prefer to get rid of the U.S. currency. At the moment, dollar selling is not yet massive, but we have a new signal, and I expect further growth of the pair.

The chart picture continues to signal bullish dominance, but on a long-term basis. The bullish trend remains intact despite the sideways movement of recent months. Yesterday, a new bullish signal was formed in imbalance 11. Thus, I once again expect growth at least to 1.1976 (the lower boundary of the weekly imbalance).

The news background on Friday can again be divided into two parts: economic and political. The economic side once again failed to attract much interest from traders. Business activity indices in Germany and the euro area were simply ignored. The political side—the cancellation of Donald Trump's tariffs and the easing of tensions around Greenland—could have helped bearish traders, but market participants interpreted it as a negative event. Thus, this week, only Donald Trump influenced trader sentiment.

Bulls have had more than enough reasons for a renewed offensive for the past four to five months, and with each passing day their number only increases. These include the (in any case) dovish prospects for FOMC monetary policy, Donald Trump's overall policy (which has not changed recently), the U.S. confrontation with China (where only a temporary truce has been reached), protests by the American public against Trump under the "No Kings" banner, weakness in the labor market, the bleak outlook for the U.S. economy (recession), and the government shutdown (which lasted a month and a half but was clearly not priced in by traders). And now there is also U.S. military aggression toward certain countries, criminal prosecution of Powell, and the "Greenland mess." Thus, further growth of the pair, in my view, will be entirely natural.

I still do not believe in a bearish trend. The news background remains extremely difficult to interpret in favor of the dollar, which is why I am not trying to do so. The blue line marks the price level below which the bullish trend can be considered over. For bears to reach it, they would need to move down about 320 points, and I consider this task impossible given the current news background and circumstances. The nearest growth target for the European currency remains the bearish imbalance of 1.1976–1.2092 on the weekly chart, which was formed back in June 2021.

News calendar for the United States and the European Union:

• European Union – German Business Climate Index (09:00 UTC)
• United States – Change in Durable Goods Orders (13:30 UTC)

On January 26, the economic calendar contains two entries, but only the U.S. report is of some interest. The impact of the news background on market sentiment on Monday may be felt in the second half of the day.

EUR/USD forecast and trading advice:

In my view, the pair remains in the process of forming a bullish trend. Despite the fact that the news background continues to favor the bulls, bears have carried out attacks regularly in recent months. Nevertheless, I see no realistic reasons for the start of a bearish trend.

From imbalances 1, 2, 4, 5, 3, 8, and 9, traders had opportunities to buy the euro. In all cases, we saw some degree of growth, and the bullish trend remains intact. Yesterday, a new bullish signal was formed from imbalance 11, once again allowing traders to open long positions with a target of 1.1976. Over the past six months, the pair's growth has been extremely weak or absent, but bullish sentiment persists in the market.