Sell EURUSD H4 Channel Breakout

FX:EURUSD   Euro / U.S. Dollar
EUR/USD Poised for Potential Downtrend as Bullish Channel Breaches Lower Boundary.

The EUR/USD pair might be heading south, exhibiting a bearish signal on its H4 chart. A recent breakdown through the lower border of a bullish channel pattern suggests waning upward momentum and a potential shift in trend.

Key Points:

Bullish Channel Breakout: The price had been confined within an ascending channel, characterized by rising support and resistance lines. However, a recent break below the lower support at 1.0900 indicates a potential shift in momentum towards the downside.

Sell Entry: Consider entering a short position around the current price near 1.0900, offering an entry point close to the breakout level.

Target Levels: Initial bearish targets lie at the support levels of 1.0700 and 1.0585, marking the previous bottoms within the channel.

Stop-Loss: To manage risk, place a stop-loss order above the resistance line of the broken channel at 1.0950

EUR/USD News and Events to Watch Next Week (January 29 - February 2):

Federal Reserve (Fed) Meeting and Interest Rate Decision (Jan 31): This is the biggest event of the week. A hawkish Fed stance with another large rate hike (75bps or more) and strong economic projections could significantly strengthen the USD against the EUR. Conversely, dovish hints or smaller rate increases could favor the EUR.

US Non-Farm Payrolls (Feb 2): Strong jobs growth could indicate a resilient US economy and support the USD. Conversely, weaker data could dampen hawkish sentiment and benefit the EUR.

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Fundamental Updates :

January 2024: The NFP report exceeded expectations, showing a gain of 353,000 jobs despite forecasts of 180,000. This robust job growth suggests a strong US labor market and could support the USD by Reinforcing expectations for continued Fed rate hikes: A hawkish Fed stance strengthens the USD against other currencies.

January 2024: The unemployment rate remained steady at 3.7%, slightly higher than the expected 3.8%. While still at historically low levels, a slight increase could raise concerns about potential wage inflation pressures, contributing to:
Maintaining Fed hawkishness: The Fed might aim to cool the labor market and curb inflation.

US Consumer Price Index (CPI) (Feb 13): A higher-than-expected inflation reading could strengthen the USD as the Fed might be pressured to raise rates further. Conversely, a lower reading could offer some support to the GBP.

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