EUR/USD Begins 2025 At A 25-Month Low

On 2nd January, the first trading day of the year, EUR/USD dropped below the psychological level of 1.025, marking its lowest point since November 2022.

Factors Behind the Decline

→ Holiday Effect: Reduced market liquidity during the holiday period has left the pair vulnerable to volatility spikes.
→ Portfolio Rebalancing: Market participants may be adjusting their positions for the new calendar year.
→ Dollar Strength Reassessment: Uncertainty surrounding the policies of President-elect Trump, with his inauguration scheduled this month, has sparked renewed focus on the dollar.

Technical Analysis Highlights

→ Downward Channel Formation: Throughout 2024, EUR/USD movements formed a downward channel, with key pivot points highlighted by red circles. The first of these points emerged during last year’s holiday period.
→ False Breakout: The bullish cup and handle pattern identified on 30th December led to a false breakout (indicated by an arrow), allowing bears to gain control and drive the price to the channel’s lower boundary.

The intersection of the channel’s lower boundary with the 1.025 psychological level might act as significant support. The slight recovery observed on the morning of 3rd January suggests a possible stabilisation.

As in previous years, the holiday period could result in a new key pivot point forming on the EUR/USD chart.

FXOpen offers spreads from 0.0 pips and commissions from $1.50 per lot. Enjoy trading on MT4, MT5, TickTrader or TradingView trading platforms!

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.