EUR/USD Overview. December 24. The Market Found Its Time

[Ben Graham]

The EUR/USD currency pair continued its upward movement on Tuesday, which may seem paradoxical to many. It is worth recalling that last week the market was flooded with various important macroeconomic reports and fundamental events. However, we did not see any significant movements, particularly strong trending movements. Yet, as Christmas week began, typically characterized by a truncated market calendar, the European currency soared. We see nothing surprising in this fact, as we have been repeating throughout 2025: the US dollar will be declining. However, no one expected the market to suddenly become active right before the holidays.

This is precisely the essence of the currency market. When everyone expects a specific movement, the market stands still. When everyone prepares for holidays and vacations, the market shoots up. Remember, the market isn't an abstract concept; it is primarily made up of major players who can move prices with their trades. Since large players counter each other as well as retail traders, the market is constantly in a battle among different trader groups. Consequently, various types of manipulations and unexpected moves occur to catch opponents off guard and seize their liquidity. The euro is rising even though there were no significant events worldwide on Monday. But can we say that this movement is illogical? Especially after the failure of macroeconomic data in the US and the decline in inflation, which allows the Federal Reserve to continue its accommodative monetary policy?

The big players simply waited for the right moment. The pair spent the last six months in a flat range, and we have mentioned several times that a flat is not a random occurrence. A flat is a period of accumulation or distribution of trading positions, primarily by the major players. It is quite possible that the end of December marked the completion of this process, paving the way for the resumption of the 2025 trend. Throughout this time, the trend has not disappeared or ended. Therefore, it was simply necessary to wait for its resumption.

We advised buying the pair near the lower boundary of the sideways channel at 1.1400-1.1830, at the 1.1500 level. Naturally, it is still too early to say the flat is 100% over, but in recent weeks, bulls have exerted increasingly strong pressure. A flat cannot last forever, and the fundamental backdrop remains unfavorable only for the dollar. The labor market is "in a coma," inflation is falling, and the Fed will reduce rates in 2026 (unlike the European Central Bank), while Jerome Powell will step down in four months.

On the daily timeframe, the price has reversed around the Senkou Span B line, another sign of continued upward movement.

The average volatility of the EUR/USD pair over the last five trading days, as of December 24, is 51 pips, characterized as "medium-low." We expect the pair to move between levels 1.1726 and 1.1828 on Wednesday. The upper linear regression channel is directed upwards, but the flat is still ongoing on the daily timeframe. The CCI indicator entered the oversold area twice in October but then moved into the overbought area in early December. A downward pullback is possible and is already being observed.

Support Levels:

• S1 – 1.1719
• S2 – 1.1658
• S3 – 1.1597

Resistance Levels:

• R1 – 1.1780
• R2 – 1.1841

Trading Recommendations

On Wednesday, traders may consider trading from the 1.1750-1.1760 area. A bounce from this level will make long positions relevant, targeting the 1.1800-1.1830 area. A consolidation below this range will lead to a decline towards the Senkou Span B line.

Explanation of Illustrations:

• Price Support and Resistance Levels: Thick red lines indicate levels where movement may stop and do not serve as sources of trading signals.
• Kijun-sen and Senkou Span B Lines: These are Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe, regarded as strong lines.
• Extremum Levels: Thin red lines indicate levels from which the price has previously bounced and serve as sources of trading signals.
• Yellow Lines: Trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT Charts: The net position size of each category of traders.

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