31.01.202411:42 Forex Analysis & Reviews: EUR/USD. January 31st. An important day will start with crucial data from Germany

The EUR/USD pair rebounded from the corrective level of 76.4% (1.0823) and experienced a slight rise on Tuesday, but on the morning of January 31, it found itself near the level of 1.0823 again. A new rebound will favor the European currency and some growth towards the corrective level of 61.8% (1.0883). Fixing the pair's rate below the level of 1.0823 will allow for a further decline towards the corrective level of 100.0% (1.0725).

The situation with the waves continues to become more complex and ambiguous. The last upward wave broke the peak from January 23, the first sign of a change in the trend from "bearish" to "bullish." However, the next downward wave returned the pair to the previous low (around the level of 1.0823) and broke it. Thus, we got a sign of changing from a "bullish" trend (which has not even started yet) to a "bearish" one. The pair's movements are currently ambiguous, and it isn't easy to make unequivocal conclusions about the traders' sentiment.

The information background on Tuesday was of average strength. Reports on the GDP of the European Union and Germany were disappointing again. In Germany, the economic decline was 0.3% in the fourth quarter, and in the European Union, it was 0%. Speaking of the European GDP, it was slightly better than traders' expectations. However, an increase of 0% is hardly considered a positive value. Bullish traders did not activate after the release of this data.

This morning in Germany, four reports will be released at once, which, on the one hand, are important, but on the other hand, it is only one country within the Alliance. Thus, traders' reactions may be restrained at any values in the reports below. In the evening, the FOMC decisions on the interest rate will be known. Jerome Powell will answer questions from journalists at the press conference, addressing issues related to GDP and inflation.

On the 4-hour chart, the pair reversed in favor of the US dollar and continued a weak decline toward the corrective level of 38.2% (1.0765). Fixing the quotes below the ascending trend corridor means that the trend has changed to "bearish," and now, a more significant decline in the euro is expected. However, a "more significant movement" in the near future is unlikely. The decline will likely be more prolonged as traders' activity is currently low.

Commitments of Traders (COT) report:

On the last reporting week, speculators closed 9104 long contracts and opened 6664 short contracts. The sentiment of major traders remains "bullish" but continues to weaken. The total number of long contracts speculators hold is now 195 thousand, and Short contracts - 107 thousand. Despite a fairly large gap, the situation will continue to change in favor of bears. Bulls have dominated the market for too long and need strong information to maintain the "bullish" trend. I do not see such a background now. Professional traders may continue to close longs soon. The current figures allow for the euro's continued decline in the coming months.

News Calendar for the US and the European Union:

European Union – Change in Retail Sales in Germany (07-00 UTC).

European Union – Change in the Number of Unemployed in Germany (08-55 UTC).

European Union – Unemployment Rate in Germany (08-55 UTC).

European Union – Consumer Price Index in Germany (13-00 UTC).

US – ADP Non-Farm Employment Change (13-15 UTC).

US – FOMC Meeting Minutes (19-00 UTC).

US – FOMC Press Conference (19-30 UTC).

On January 31, the economic events calendar contains many important entries, among which the FOMC meeting stands out. The impact of the information background on traders' sentiment today can be strong.

Forecast for EUR/USD and trader advice:

Selling the pair was possible on the rebound from the level of 1.0883 on the hourly chart with the target of 1.0823. New sales will be possible when fixing below the level of 1.0823 with the target of 1.0725. I will not consider buying the pair today, but the results of the FOMC meeting and Powell's speech may cause the pair to rise.