According to the EUR/USD chart, on 2nd January, the first trading day of the year, the EUR/USD pair fell below the psychological level of 1.025, the lowest mark since November 2022.

There are few news events, and the EUR/USD rate decline may be attributed to:
→ The holiday period still affecting financial markets, reducing liquidity and creating vulnerabilities for volatility spikes;
→ Market participants potentially rebalancing their portfolios for the new calendar year;
→ Reassessing the strength of the dollar amid uncertainty about the actual steps of President-elect Trump, whose inauguration is scheduled for this month.

Meanwhile, technical analysis of the EUR/USD chart reveals that:

→ In 2024, price fluctuations formed a downward channel, with key pivot points marked by red circles. Notably, the previous holiday period led to the formation of the first of these points.

→ The bullish cup and handle pattern, which we discussed on 30th December, resulted in a false bullish breakout (indicated by an arrow). Seizing the bulls' failure, the bears pushed the price to the lower boundary of the mentioned channel.

The area where the lower boundary of the channel intersects the psychological level of 1.025 could serve as strong support. The recovery observed on the morning of 3rd January may confirm this.

The holiday period may lead to the formation of a new key pivot point on the EUR/USD chart, as has happened before.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips (additional fees may apply). Open your FXOpen account now or learn more about trading forex with FXOpen.

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.