Overview of the EUR/USD pair. January 7. Trump's last battle: what legacy will the current US president leave to the Republicans?

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 90.8796

The EUR/USD currency pair on Wednesday, January 6, quietly continued its upward movement. Quotes have once again updated their 2.5-year highs and do not want to go far from them. Thus, the progressive upward movement is preserved.

During almost the entire term of Donald Trump's presidency, we have criticized the actions and statements of the American president. All because his actions and statements were often devoid of any logic, sometimes absurd to the point of impossibility, and sometimes contrary to common sense. We have already written earlier that Donald Trump ran the country as his business. And managing a business empire and a country are different things. We will not now list all the failures of America over the past four years. It is only worth noting that most of the goals that Trump announced in 2016 were not achieved. From our point of view, the fact that Trump is leaving is fair. He did not return American production to the United States, his trade war with China did not bring the desired results, and China's position in the international arena only strengthened during the Trump era. Donald Trump himself suffered a crushing defeat in the election. The difference in the number of votes with Democrat Joe Biden is about 7 million. And this is quite a big difference. But the fact that Donald Trump will not be re-elected for a second term was clear even before the election. Biden's odds were up to 90%. And most importantly, Joe Biden did nothing supernatural to win the election. He simply drew the attention of the electorate to Trump's mistakes, while he seemed to be clean before the American nation. Republicans also failed to win back the Lower House of Congress in the same election. They strengthened their positions in it, however, they failed to achieve a majority. Thus, the president of the country will be a Democrat and the House of Representatives will be also controlled by Democrats. There is only one open question: who will control the Senate? At first glance, everything seemed obvious. At least until the day before yesterday, no one even discussed the election in the state of Georgia in which the first round of elections to the Senate did not reveal the winners. None of the 4 candidates received more than 50% of the vote. And on January 6, the second round of elections was held. And in the native Republican state, there is a trend of voting for Democrats.

To understand the importance of the state of Georgia, it should be clearly understood that there are exactly 100 seats in the Senate. 50 seats have already been secured by Republicans, thus, a victory in Georgia for any Republican candidate will bring them control of the Senate as a consolation prize. However, Jona Ossoff and Raphael Warnock (both Democrats) were leading the vote yesterday. And if they win (although the margin of victory over their opponents from the Republican Party is minimal, so it is not yet a fact), then this will mean that the seats in the Senate will be divided in the proportion of 50/50. But that's not all! A 50/50 distribution of power in the Senate would mean victory for the Democrats. Because with any equality of votes, according to US law, the (future) US Vice President Kamala Harris will have a decisive vote. It's the same as if the Democrats had a majority in the Senate. Thus, Republicans could lose everything in the 2020 election.

Thus, we can once again conclude how it is necessary or not necessary to lead the country. This is an object lesson to Boris Johnson, who resembles Trump in his manner of governing. Although Johnson is not a businessman like Trump, he often tries to negotiate from a position of strength and is guided by the principle of "either the way I want or nothing". However, Johnson still concedes at the end, which was proved by the trade deal concluded with the European Union. Without London's concessions, there would be no deal.

Well, the US dollar, meanwhile, continues to almost free fall. No, the US currency does not lose 100 points a day. It decreases systematically. But this fall is stable and almost recoilless. We wrote about the absence of a tangible and proportionate correction a few months ago, when the euro/dollar pair was flat for about 4 months. Even then, it was clear that there was no demand for the US dollar. And it is absent to such an extent that the pair cannot even correct after a sufficiently strong upward movement. Now the dollar continues to fall from November 4 (very symbolic, because on November 3 there were elections). During this time, the pair "plowed" up 720 points. The maximum correction for these two months was 170 points and lasted for three days. And even though there were no visible reasons for the strengthening of the euro currency, yet the upward trend remains and trading should continue to increase. At least this is logical.

As for the technical picture, both linear regression channels are directed upwards, as is the moving average line. No consolidation of the price below the moving average led to a significant drop in the pair. Thus, the upward trend is not in doubt.

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The volatility of the euro/dollar currency pair as of January 7 is 76 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.2236 and 1.2388. A reversal of the Heiken Ashi indicator to the top can signal a new round of upward movement.

Nearest support levels:

S1 – 1.2207

S2 – 1.2085

S3 – 1.1963

Nearest resistance levels:

R1 – 1.2329

R2 – 1.2451

R3 – 1.2573

Trading recommendations:

The EUR/USD pair has started a new round of correction. Thus, today it is recommended to open new long positions with a target of 1.2388 if the Heiken Ashi indicator turns up or the price bounces off the moving average. It is recommended to open new sell orders if the pair is fixed below the moving average with targets of 1.2236 and 1.2207.

The material has been provided by InstaForex Company - www.instaforex.com