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12.01.202618:40 Forex Analysis & Reviews: EUR/USD. Smart Money. Trump Solved the Bulls' Indecision Problem

Rilevanza fino a 11:00 UTC--5

Exchange Rates 12.01.2026 analysis

The EUR/USD pair had been falling for eleven consecutive days. Within this decline, the bullish imbalance 9 was worked out with room to spare. This pattern has not been invalidated so far, and reactions from areas of interest can take different forms. Therefore, I continue to believe that the bullish trend remains intact. In my view, the bulls could have launched a new offensive as early as last week, when most U.S. economic data once again brought nothing but disappointment. However, the bears continued to push their position with notable persistence. The situation was resolved by Donald Trump overnight on Monday. A criminal investigation was launched against Jerome Powell, and traders clearly understand whom they should thank for this. Powell himself stated that having an independent opinion in America is becoming dangerous, and that his persecution has only one reason — his unwillingness to cut interest rates to the levels demanded by the U.S. president.

The dollar immediately began to decline, and I continue to wait for a bullish reaction from imbalance 9 until the invalidation of this pattern forces a conclusion that the bullish impulse has been canceled. Invalidation would occur below the 1.1616 level. This would not turn the trend bearish, but for some time the bears could seize the initiative.

The chart picture continues to signal bullish dominance. The bullish trend remains in place, but traders currently need new signals. Such a signal can be formed only within imbalance 9, but so far it has not appeared. If bearish patterns emerge or bullish ones are invalidated, the trading strategy will need to be adjusted. At the moment, however, there are no grounds for doing so.

The news background on Monday was essentially absent, but traders needed nothing more than the criminal prosecution of Powell and the explanations he provided shortly afterward to make decisions. In my view, this was a very predictable continuation of the story, and only one conclusion can be drawn from it — Trump seeks to control everything and everyone in whom or in which he is interested. As a result, the Federal Reserve has every chance of losing its independence, and the dollar has an excellent opportunity to fall well beyond the 1.20 level against the euro.

The bulls have had plenty of reasons for a new offensive for the past 4–5 months, and all of them remain relevant. These include the dovish (in any case) outlook for FOMC monetary policy, Donald Trump's overall policy (which has not changed recently), the U.S.–China confrontation (where only a temporary truce has been reached), protests by the American public against Trump under the "No kings" banner, weakness in the labor market, bleak prospects for the U.S. economy (recession), and the government shutdown (which lasted a month and a half but was clearly not fully priced in by traders). Now this list also includes U.S. military aggression toward certain countries and the criminal prosecution of Powell. Thus, further growth of the pair, in my view, will be entirely logical.

I still do not believe in a bearish trend. The news background remains extremely difficult to interpret in favor of the dollar, and therefore I do not attempt to do so. The blue line shows the price level below which the bullish trend could be considered finished. Bears would need to push the price down about 300 points to reach it, and I consider this task impossible under the current news background and circumstances. The nearest upward target for the European currency remains the bearish imbalance zone of 1.1976–1.2092 on the weekly chart, which was formed back in June 2021.

News Calendar for the U.S. and the Eurozone:

  • United States – Consumer Price Index (13:30 UTC)
  • United States – New Home Sales (13:30 UTC)

On January 13, the economic events calendar contains two noteworthy entries. The impact of the news background on market sentiment on Tuesday will be felt in the second half of the day.

EUR/USD Forecast and Trader Advice:

In my view, the pair may be in the final stage of its bullish trend. Despite the fact that the news background remains on the side of the bulls, bears have attacked more frequently in recent months. Still, I see no realistic reasons for the start of a bearish trend.

From imbalances 1, 2, 4, and 5, traders had opportunities to buy the euro. In all cases, we saw some growth. Traders also had opportunities to open new trend-following long positions after a reaction from bullish imbalance 3, after a reaction from imbalance 8, and then after a rebound from imbalance 9. This week, a second reaction from bullish imbalance 9 may still occur. The upside target for the euro remains the 1.1976 level. New long trades are acceptable if a new bullish signal is formed. If not, the long strategy will need to be reconsidered.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Samir Klishi,
Analytical expert of InstaSpot
© 2007-2026
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