The growth was temporary
Hello, dear colleagues!
At the close of the trades on January 17-21, the main currency pair of the Forex market showed a downward dynamic. Thus, after the candlestick, formed two weeks before and signaled a possible change of the trend, it did not occur. The EUR/USD pair rallied during the trading session the following week. However, the growth was temporary and the pair resumed its normal course later. As it was mentioned in many previous reviews, the US Federal Reserve is ready to tighten its monetary policy, compared to their colleagues from the European Central Bank. This fact has long been no secret to anyone. Moreover, the latest Omicron variant of COVID-19 has a more negative impact on the EU economy due to a large number of new restrictions or tightening of existing ones. Besides, there are mass protests against universal and mandatory vaccination in the United States and some European countries. People want to have a choice whether to be vaccinated or not, which is related to democratic principles.
As for the most significant events in the economic calendar this week, the Fed's extended meeting is at the top. Based on its results, the decision on supply will be announced, followed by Fed Chairman Jerome Powell's press conference. Today, the EU and US indexes of business activity in the manufacturing and service sector should be focused on. More details about these and other events can be found in the economic calendar. Now, it is time to discuss the technical picture, starting with last Friday's trading week.
Weekly
As shown on the chart, the EUR/USD tried to rise to the significant psychological level of 1.1500 and failed. The pair rebounded from the level of 1.1484 and resumed the downward trend. Therefore, it becomes evident that currently euro bulls' targets to rise are unlikely, unless the Fed provides the markets with shocking data after its 2-day session, and the US dollar experiences the selling pressure. At the moment of completing the article, the pair is gradually declining to the level of 1.1300. It is impossible to consolidate below it for a long time.
Moreover, the key support is at 1.1187, and only a breakout of this level will signal a continuation of the downtrend and increase in the bearish trend in this trading instrument. Euro bulls have also a complicated task. To show the significance of their intentions, the permabulls need to overcome the significant level of 1.1500. To sum up the weekly chart, the major currency pair has more chances to continue the downward trend. I recommend opening short positions after a short rise to 1.1360 and 1.1400. I hope to provide more detailed information for opening positions on EUR/USD in tomorrow's article, when smaller time frames will be considered.
Good luck!