22.01.202612:54 Forex Analysis & Reviews: EUR/USD. The

The preliminary outcomes of the World Economic Forum in Davos were well received by dollar bulls. More precisely, the forum will only conclude tomorrow, but yesterday was of particular importance for currency market traders. Essentially, yesterday the fate of Greenland was being decided: the political dispute around this giant island reached its climax.

Contrary to gloomy forecasts, Donald Trump did not implement the most escalatory scenario. According to media insiders, he stepped back from his maximalist demands and agreed to strike a deal that does not involve violating Danish sovereignty.

According to Axios, the deal envisages an update to a 75-year-old agreement ("On the Defense of Greenland"). This document allows the United States to build military bases on the island and establish defense zones subject to a relevant NATO decision. At the same time, it is emphasized that the deal approved by Trump does not provide for the transfer of the Danish island to the United States. According to Axios, Washington will begin negotiations with Denmark in the coming weeks on the parameters of a potential agreement.

Market participants breathed a sigh of relief, and the U.S. dollar index partially recovered its positions.

Nevertheless, there is no euphoria in the markets. For example, sellers of the EUR/USD pair pushed the price down to the intermediate support level of 1.1670 (the Tenkan-sen line on D1), but failed to break through it despite the rise in the DXY.

In my view, this restrained reaction by traders can be explained by several reasons. First, the above-mentioned deal has not been officially confirmed. On his social network, Donald Trump stated that he had agreed with NATO Secretary General Rutte on the general framework of agreements on Greenland, and therefore would not introduce tariffs against the European Union and the United Kingdom. However, the U.S. president did not specify whether Denmark agrees to the deal (or whether Copenhagen is even aware of the agreements reached).

Second, the White House chief is de facto continuing to insist on acquiring Greenland—and not only publicly. According to the Daily Mail, Washington plans to offer each resident of Greenland one million dollars in exchange for a positive vote in favor of the island joining the United States. According to the publication's sources, this plan is being considered as an alternative way to achieve an increased U.S. military presence in the Arctic region.

Third, traders are gradually shifting their focus back to "classic" fundamental factors and therefore are in no hurry to make trading decisions (including in favor of the dollar) ahead of important reports that will be released during Thursday's U.S. trading session.

In particular, today we will learn the November reading of the core PCE index, which is one of the key inflation indicators. According to the forecasts of most analysts, the indicator will slow to 2.7%, after declining to 2.8% in the previous month (October). Today we will receive only the November data (due to the consequences of the shutdown), but the release still retains high significance, as it is the last key inflation indicator ahead of the Federal Reserve meeting scheduled for next week.

Data on U.S. GDP growth will also be published today (the final estimate for the third quarter of 2025). According to preliminary forecasts, the final GDP estimate will match the initial one and amount to 4.3%. Consensus forecasts and various calculation models (in particular, the Atlanta Fed's GDPNow) indicate steady dynamics in the US economy. Potential downside risks are mainly associated with a possible revision of business investment inventory volumes; however, in the opinion of most experts, they are unlikely to lead to a significant revision of the "headline" figure.

Another important report today is Unemployment Claims. Forecasts suggest that the number of initial jobless claims will rise by 209 thousand. For dollar bulls, it is important that this figure remains below the 200-thousand level (last week, claims increased by 198 thousand). And although the actual difference between an increase of 198 thousand and 209 thousand is small, the psychological factor will play a role here—the dollar will receive substantial support if the indicator remains below the 200-thousand target for a second consecutive week.

Thus, uncertainty persists for the pair. The preliminary results of Davos provided support to the U.S. currency, but for a sustainable downward move in EUR/USD, sellers need additional informational drivers—this time of a macroeconomic nature. Therefore, all attention is on today's releases, which should determine the direction of price movement (especially if they turn out to be in the "green zone").

Technical analysis also points to uncertainty. On the daily chart, the EUR/USD pair is located at the middle line of the Bollinger Bands, between the Tenkan-sen and Kijun-sen lines, and above the Kumo cloud. A similar picture has formed on the H4 and W1 timeframes. Considering short positions in the pair becomes reasonable when bears break the support level of 1.1650 (the lower boundary of the Kumo cloud on D1)—in that case, the Ichimoku indicator will form a bearish "Parade of Lines" signal on the daily chart. The target of the downward move is the 1.1580 level, which corresponds to the lower Bollinger Band on the same timeframe.