EURUSD Euro/US Dollar

EURUSD (Euro/US Dollar) Weekly Outlook β€” Week of January 12, 2026

Session Weekly Outlook
Date January 12, 2026
Bias
βšͺ Neutral
Confidence High

EURUSD (Euro/US Dollar) Weekly Outlook β€” Week of January 12, 2026

"When momentum aligns, we move."


1. Week-in-Review (Previous Week Summary)

Last Week's Price Action:
- Weekly Open: 1.17064 (Monday, Jan 5)
- Weekly High: 1.17454
- Weekly Low: 1.16193
- Weekly Close: 1.16579 (Friday, Jan 11)
- Weekly Change: -0.42% (-48 pips)
- Current Price: 1.16600 (Monday, Jan 12)

MCM State Progression:
EURUSD exhibited classic Distribution Phase characteristics throughout the week. Price opened at 1.1706, tested resistance at 1.1745 on Tuesday (49-pip rally attempt), then initiated a systematic markdown toward 1.1619 by Wednesday's London session. Thursday-Friday consolidated within 1.1650-1.1670 range, forming a weak demand zone. The failure to reclaim 1.1700 psychological level confirms institutional distribution is underway, with EUR bears in control. Monday's flat open at 1.1660 suggests weekend positioning favors range consolidation before US CPI data Tuesday.

Key Events:
- Trump Uncertainty Premium: Political instability and potential policy shifts pressuring EUR as European exporters face tariff threats
- ECB Policy Stagnation: No clear hawkish pivot despite sticky inflation; market pricing dovish bias through 2026
- EUR Weakness Confirmed: Failed breakout above 1.1750 resistance reinforces bearish structure
- DXY Weakness Paradox: Despite DXY falling to 99.023, EUR failed to capitalizeβ€”highlighting fundamental EUR weakness rather than USD strength

Scorecard Recap:
- ❌ Long Setup @ 1.1750 Breakout: Rejected at 1.1745; 49-pip false breakout
- βœ… Short Setup @ 1.1720 Distribution: Triggered Tuesday, ran 130+ pips to 1.1619 (clean Distribution fade)
- βœ… Support Hold @ 1.1600: Low printed 1.1619; demand zone absorption prevented deeper markdown
- ❌ Weekly Close Above 1.1700: Failed to reclaim psychological level; closed at 1.1658


2. Supply/Demand Zone Map (Weekly Perspective)

Fresh Weekly Zones (Highest Priority)

Zone Type Price Range Validity Context
Supply (Fresh) 1.1720 - 1.1745 Strong Tuesday's failed breakout created fresh supply; clean institutional distribution zone
Demand (Fresh) 1.1619 - 1.1640 Moderate Wednesday's low formed this zone; first retest held Friday; fragile support
Supply (Multi-Day) 1.1750 - 1.1780 Strong Multi-week resistance cluster; psychological 1.1800 barrier proximity; untested since late December

Multi-Touch Zones (Historical Significance)

Zone Type Price Range Touch Count Last Test Validity
Demand 1.1600 - 1.1625 6+ touches Jan 8 (Wed) Strong β€” Major multi-week support; swing low base from December
Supply 1.1780 - 1.1820 4 touches Late Dec 2025 Strong β€” Major resistance band; breakdown zone from Q4 2025
Demand 1.1550 - 1.1580 3 touches Mid Dec 2025 Moderate β€” Secondary support; only relevant if 1.1600 breaks

Flipped Zones (Role Reversals)

Original Role Price Range Flipped To Flip Date Strength
Support 1.1700 - 1.1720 Resistance Jan 8 Strong β€” Clean flip; former demand now supply; critical retest zone
Demand 1.1650 - 1.1670 Consolidation Jan 9-11 Weak β€” Chop zone; no clear directional bias; avoid trading mid-range

Zone Validity Assessment

Strong Zones (Within 100 pips of Current Price 1.1660):
- 1.1720 - 1.1745 Supply (60-85 pips above) β€” Actionable This Week
- 1.1700 - 1.1720 Resistance (40-60 pips above) β€” Actionable This Week
- 1.1619 - 1.1640 Demand (20-41 pips below) β€” Actionable This Week
- 1.1600 - 1.1625 Support (35-60 pips below) β€” Actionable This Week

Moderate Zones:
- 1.1750 - 1.1780 Supply (90-120 pips above) β€” Requires bullish reversal catalyst
- 1.1550 - 1.1580 Demand (80-110 pips below) β€” Only relevant if Distribution accelerates

Weak/Distant Zones:
- 1.1450 - 1.1500 Demand (160-210 pips below) β€” Only relevant for multi-week breakdown scenarios


3. Support/Resistance Matrix (Weekly + Daily Confluence)

Level Type Price Strength Distance Weekly Context
R3 Psychological/Supply 1.1800 Very Strong +140 pips Major psychological barrier; Q4 2025 breakdown zone; analyst consensus resistance
R2 Structural 1.1750 Strong +90 pips Failed breakout zone; Fibonacci 0.618 retracement; requires fundamental catalyst
R1 Flipped Support 1.1700 Strong +40 pips Psychological level; former demand now resistance; critical retest zone
Current - 1.1660 - - Distribution Phase (Early-to-Mid Stage); EUR bears in control
S1 Fresh Demand 1.1620 Moderate -40 pips Wednesday low; first pullback target; fragile support
S2 Multi-Touch Support 1.1600 Strong -60 pips Major support zone; psychological level; 6+ touches since December
S3 Structural Support 1.1550 Moderate -110 pips Secondary demand; only relevant if 1.1600 breaks decisively

Key Confluence Notes:
- R1 (1.1700): Triple confluence β€” Psychological round number + Flipped support-to-resistance + Volume shelf from previous accumulation
- S2 (1.1600): Triple confluence β€” Psychological level + Multi-week support base + Fibonacci 0.382 support from November rally
- R2 (1.1750): Double confluence β€” Failed breakout zone + Weekly supply cluster + Fibonacci 0.618 retracement


4. Liquidity Hunt Forecast

Primary Hunt Targets

Target Type Price Level Stop Cluster Probability Session Timing
Sell-Stops Below 1.1600 1.1595 - 1.1580 Very High Density High (70%) London/NY (Tue-Thu)
Buy-Stops Above 1.1700 1.1705 - 1.1720 High Density Medium (55%) Asian/London (Post-CPI)
Round Number Magnet 1.1600 Very High Very High (80%) Any Session
1.1550 Major Support 1.1545 - 1.1535 Medium Density Low (30%) Only if Distribution accelerates

Hunt Probability Rationale

High Probability β€” Sell-Stops Below 1.1600:
- Proximity: Only 60 pips below current price (1.1660)
- Clean Liquidity: Major psychological level with 6+ touches; retail stop-loss cluster below 1.1600
- Volume Profile: Weak demand zone at 1.1619-1.1640; vulnerable to liquidity sweep
- Fundamental Catalyst: US CPI Tuesday + Retail Sales Wednesday could spike USD strength β†’ EUR flush
- Session: London/NY sessions Tuesday-Thursday most volatile; US data-driven moves favor downside break

Medium Probability β€” Buy-Stops Above 1.1700:
- Proximity: 40 pips above current price
- Context: Flipped resistance zone; retail shorts clustered above 1.1700 expecting breakdown
- Timing: Post-CPI volatility (if USD weakens on softer inflation) could trigger short squeeze
- Caveat: Requires fundamental catalyst (weak US data or ECB hawkish surprise); technical structure favors downside

Low Probability β€” Stops Below 1.1550:
- Distance: 110 pips below current price; requires major breakdown
- Condition: Only relevant if 1.1600 breaks decisively and Distribution phase accelerates into Markdown
- Catalyst Needed: Major risk-off event or aggressive Fed hawkish pivot

Round Number Magnet Analysis

1.1600 β€” The Week's Gravitational Center:
- Major psychological support where retail traders cluster stops
- Multi-week support base; breakdown triggers cascade of sell-stops
- Gateway to deeper markdown toward 1.1550-1.1500 zone
- Strategy: Expect multiple tests this week; break below 1.1595 confirms Markdown phase; bounce at 1.1600 offers short-term long setup


5. Weekly Fear Factor Assessment

    FEAR [πŸŸ’πŸŸ’πŸ”΄βšͺβšͺβšͺβšͺβšͺβšͺβšͺ] GREED
              β–²
    Score: 3.5/10 β€” Moderate Fear (Risk-Off Bias)

Inputs for Week of January 12-16, 2026

Market Indicators:
- DXY: 99.023 (Trend: Neutral-to-Weak) β€” Below 100 psychological level; Fed independence concerns weighing on dollar
- VIX: 14.49 (Volatility Regime: Low) β€” Well below 20 threshold; calm equity markets despite geopolitical noise
- US10Y: 4.171% (Yield Trajectory: Stable) β€” Above 4% supporting USD stability; ECB-Fed rate differential widens
- EURUSD: 1.1660 (Trend: Weak Bearish) β€” -0.42% last week; Distribution phase underway; failed breakout at 1.1745

COT Data (Speculative Positioning):
- Net short positioning in EUR futures elevated; hedge funds betting on EUR weakness
- ECB policy uncertainty vs. Fed hawkish bias driving EUR bearish sentiment
- Trump tariff threats on European exporters adding fundamental pressure

Economic Calendar (Key Events This Week):
- Tuesday 08:30 EST: US CPI (Inflation Data) β€” VERY HIGH IMPACT β€” Hotter CPI = stronger USD = EUR downside
- Wednesday 08:30 EST: US Retail Sales + PPI β€” HIGH IMPACT β€” Strong data = hawkish Fed = EUR pressure
- Wednesday 14:00 EST: Fed Beige Book β€” Qualitative economic assessment
- Thursday 02:00 EST: UK GDP β€” Medium impact (GBP correlation affects EUR sentiment)
- Thursday 08:30 EST: US Jobless Claims β€” Labor market health check

Fundamental Drivers:
1. EUR Structural Weakness (Bearish EUR): Trump uncertainty, ECB dovish bias, weak European growth outlook
2. ECB Policy Stagnation (Bearish EUR): No clear hawkish pivot despite sticky inflation; market pricing rate cuts through 2026
3. Fed-ECB Rate Differential (Bearish EUR): Fed holding restrictive policy while ECB faces political pressure to ease
4. Political Instability (Bearish EUR): European fiscal challenges, coalition government fragility, energy crisis legacy
5. Technical Breakdown Risk (Bearish EUR): Failed breakout at 1.1745; Distribution phase; 1.1700 resistance confirmed

Fear Factor Interpretation

Score 3.5/10 = Moderate Fear (Risk-Off Tilt for EUR):
- EUR weakness despite DXY sub-100 shows fundamental fragility
- Distribution phase confirmed; momentum favors downside
- Low VIX (14.49) indicates no panic, but EUR underperforming in calm conditions
- Paradox: EUR failing to rally despite USD weakness suggests deep structural issues

Trading Implication:
- Bearish bias dominates; favor short setups over longs
- Pullbacks to resistance (1.1700-1.1720) offer high-probability fade entries
- US CPI/Retail Sales data could accelerate downside if USD strengthens
- Week-ahead bias: Bearish β€” Target 1.1600 break; avoid catching falling knife


6. Week-Ahead MCM State Forecast

Current MCM State: Distribution Phase (Early-to-Mid Stage)

Evidence:
- Failed breakout above 1.1745 resistance (Tuesday reversal)
- Lower high formation (1.1745 < previous week's 1.1780)
- Breakdown below 1.1700 psychological support
- Consolidation at 1.1650-1.1670 range (Distribution chop)
- Volume declining on up-moves; increasing on down-moves

Expected Transition: Distribution β†’ Markdown (This Week)

Probability: Medium-High (65%)

Catalyst for Shift:
1. Break Below 1.1600 Support: If price breaks below 1.1595 with daily close confirmation, Markdown phase begins; target 1.1550 β†’ 1.1500
2. US CPI Surprise Higher (Tuesday): Hotter inflation β†’ Stronger USD β†’ EUR markdown acceleration
3. ECB Dovish Surprise: Any ECB official signaling rate cut willingness β†’ EUR selloff
4. Technical Breakdown Confirmed: Daily close below 1.1600 triggers stop-loss cascade; algorithmic selling amplifies move

Markdown Characteristics to Watch:
- Accelerated downside momentum with minimal pullbacks
- Volume expansion on down-moves (panic selling)
- Failure to reclaim 1.1620 on intraday bounces
- Bearish engulfing or marubozu candles on daily timeframe

Alternative Scenario: Distribution Extension (Range-Bound)

Probability: Medium (30%)

Catalyst for Extension:
1. US CPI Surprise Lower (Tuesday): Softer inflation β†’ Weaker USD β†’ EUR short-covering rally to 1.1700
2. 1.1600 Support Holds: Multiple rejections at 1.1600 create temporary demand; range-bound 1.1600-1.1700
3. Risk-On Sentiment: Equity rally + DXY breakdown below 98.50 β†’ EUR relief bounce
4. ECB Hawkish Surprise: Unexpected hawkish comment from ECB officials β†’ EUR short squeeze

Range-Bound Confirmation Signals:
- Daily close above 1.1680 (mid-range reclaim)
- Volume declining on both up and down moves (consolidation)
- Tight range formation (1.1600-1.1700) for 3+ days

Invalidation Scenarios

Bearish Invalidation (Markdown Phase Rejected):
- Price: Daily close above 1.1720 (reclaim of flipped resistance)
- Trigger: Major USD weakness + EUR fundamental improvement
- Implication: Distribution phase extends or Accumulation phase begins; target 1.1750-1.1780

Bullish Invalidation (Distribution Confirmed):
- Price: Daily close below 1.1595
- Trigger: 1.1600 breakdown + US data supporting USD strength
- Implication: Markdown phase begins; target 1.1550 β†’ 1.1500 β†’ 1.1450


7. Swing Trade Opportunities (Multi-Day Holds)

Setup #1: Distribution Fade Short (Preferred Setup)

Parameter Value
Setup Type πŸ”΄ Short (Fade Resistance to Distribution)
Entry Zone 1.1700 - 1.1720 (R1 resistance retest)
Ideal Entry Day Tuesday-Wednesday (Post-CPI rally if occurs)
TP1 1.1620 (80-100 pips; 0.7-0.9% gain)
TP2 1.1580 (120-140 pips; 1.0-1.2% gain)
Stop Loss 1.1745 (25-45 pips above entry; 0.2-0.4% risk)
Hold Duration 2-4 days (Close by Friday or on TP hit)
Risk:Reward 1:3 to 1:4

Trade Logic:
- IF price rallies to 1.1700-1.1720 on Tuesday-Wednesday (post-CPI short-covering or USD weakness)
- AND forms rejection signals (bearish engulfing, shooting star, volume divergence)
- AND 1.1720 supply zone holds (former Tuesday high resistance)
- THEN Enter short with conviction; target 1.1620 (TP1) by midweek, 1.1580 (TP2) by Friday
- Stop: Above 1.1745 (invalidation of Distribution phase; breakout confirmation)
- Rationale: Distribution phase intact; 1.1700 flipped to resistance; US data likely supports USD strength; technical structure favors downside

Confidence: High (75%) β€” Aligns with MCM Distribution phase; clean resistance zones; fundamental tailwinds for USD


Setup #2: Breakdown Short (Aggressive Setup)

Parameter Value
Setup Type πŸ”΄ Short (Breakdown Below Support)
Entry Zone 1.1595 - 1.1585 (Below S2 on retest)
Ideal Entry Day Wednesday-Thursday (Post-Retail Sales/PPI volatility)
TP1 1.1550 (35-45 pips; 0.3-0.4% gain)
TP2 1.1500 (85-95 pips; 0.7-0.8% gain)
Stop Loss 1.1625 (30-40 pips above entry; 0.3-0.4% risk)
Hold Duration 1-3 days (Quick momentum trade)
Risk:Reward 1:2 to 1:3

Trade Logic:
- IF price breaks below 1.1600 on Tuesday-Wednesday (CPI/Retail Sales USD strength spike)
- AND closes below 1.1595 on 4-hour or daily timeframe (confirmation)
- THEN Wait for pullback/retest of 1.1600 level (now flipped to resistance)
- Enter short on rejection from 1.1595-1.1600; target 1.1550 extension
- Stop: Above 1.1625 (failed breakdown invalidation)
- Rationale: 1.1600 breakdown triggers stop-loss cascade; Markdown phase accelerates; clean downside momentum

Confidence: Medium (60%) β€” Requires breakdown confirmation; higher risk due to potential whipsaw at major support; strong US data needed as catalyst


Setup #3: Contrarian Long (High-Risk Counter-Trend)

Parameter Value
Setup Type 🟒 Long (Mean Reversion from Oversold)
Entry Zone 1.1595 - 1.1610 (S2 support hold with reversal signals)
Ideal Entry Day Thursday-Friday (Week-end USD profit-taking)
TP1 1.1650 (40-55 pips; 0.3-0.5% gain)
TP2 1.1680 (70-85 pips; 0.6-0.7% gain)
Stop Loss 1.1575 (20-35 pips below entry; 0.2-0.3% risk)
Hold Duration 1-3 days (Into following week)
Risk:Reward 1:2 to 1:3

Trade Logic:
- IF price reaches 1.1595-1.1610 zone on Wednesday-Thursday
- AND forms strong reversal signals (bullish engulfing, hammer, double bottom)
- AND volume spikes on rejection (capitulation signal)
- THEN Enter long targeting mean reversion to 1.1650-1.1680 range
- Stop: Below 1.1575 (invalidation if support breaks)
- Rationale: 1.1600 major support; oversold bounce potential; week-end USD profit-taking; short-term relief rally

Confidence: Low (35%) β€” Counter-trend setup; requires strong reversal signals; risky against Distribution momentum

Warning: Only take this trade with clear Accumulation phase evidence (volume spike, multiple rejections, bullish divergence on RSI). Do NOT buy blindly at 1.1600.


8. Session-by-Session Playbook

Monday, January 12 (Asian/London Sessions)

Expected Behavior: Consolidation ahead of Tuesday CPI
- Asian Session: Range-bound 1.1650-1.1670; low volatility pre-CPI positioning
- London Session: Potential probe toward 1.1680-1.1700; shorts may cover ahead of data
- Key Levels: Support at 1.1650 (range low), Resistance at 1.1700 (psychological barrier)
- Bias: Neutral (Range-bound 1.1650-1.1700)
- Action: Avoid initiating positions; wait for CPI clarity Tuesday


Tuesday-Wednesday, January 13-14 (Midweek Volatility)

Expected Behavior: High-impact news volatility (CPI, PPI, Retail Sales)
- Tuesday 08:30 EST β€” US CPI:
- Scenario 1 (CPI Higher): EUR selloff toward 1.1620-1.1600; USD strength dominates
- Scenario 2 (CPI In-Line/Lower): EUR short-covering rally to 1.1700-1.1720; short squeeze potential
- Wednesday 08:30 EST β€” Retail Sales + PPI:
- Strong Data: Bearish EUR (hawkish Fed narrative strengthens)
- Weak Data: Bullish EUR short-term (dovish Fed expectations)
- Wednesday 14:00 EST β€” Fed Beige Book:
- Watch for inflation/recession language; qualitative Fed assessment
- Key Levels to Watch:
- Resistance: 1.1700 (major), 1.1720 (supply zone fade entry)
- Support: 1.1620 (pullback target), 1.1600 (breakdown trigger)
- Bias: High Volatility (Data-Dependent)
- Action:
- Pre-CPI: Reduce position size; avoid tight stops
- Post-CPI Spike to 1.1700-1.1720: Enter shorts (Distribution fade setup)
- Post-CPI Drop to 1.1600: Monitor for breakdown or reversal


Thursday-Friday, January 15-16 (Week-End Positioning)

Expected Behavior: Trend continuation or consolidation
- Thursday Morning: Digest CPI/Retail Sales volatility; direction clarifies
- Thursday 08:30 EST β€” Jobless Claims: Secondary data; watch for labor market surprises
- Friday: Week-end profit-taking or position-squaring
- Key Scenarios:
- Scenario 1 (Markdown Confirmed): Price breaks 1.1595 Wednesday-Thursday β†’ Extends to 1.1550-1.1530 by Friday
- Scenario 2 (Range-Bound): Price consolidates 1.1600-1.1680 β†’ Weekend uncertainty keeps traders flat
- Scenario 3 (Short Squeeze): Price reclaims 1.1700 β†’ Rally to 1.1750 triggers stop-outs
- Bias: Neutral (Position-Squaring Expected)
- Action:
- If Short from 1.1720: Take profits at 1.1620-1.1600; don't overstay
- If Long from 1.1600: Target 1.1650-1.1680 by Friday close
- If Flat: Wait for next week's setup; avoid Friday chop


9. Risk Events Calendar

Date Time (EST) Event Expected Impact Pairs Affected EUR Impact
Mon, Jan 12 05:50 ECB Vice President Guindos Speech High EUR/USD Medium-High β€” ECB policy signal
Tue, Jan 13 02:00 UK Employment Report High GBP/USD, EUR/GBP Low-Medium β€” Risk sentiment correlation
Tue, Jan 13 08:30 US CPI (Inflation Data) VERY HIGH ALL pairs, EUR/USD VERY HIGH β€” Primary driver for USD/EUR direction
Wed, Jan 14 22:00 (Tue) China Trade Balance High AUD/USD, risk sentiment Low β€” Indirect via risk appetite
Wed, Jan 14 08:30 US Retail Sales VERY HIGH ALL pairs, EUR/USD VERY HIGH β€” Consumer spending = Fed policy signal
Wed, Jan 14 08:30 US PPI HIGH USD pairs, EUR/USD HIGH β€” Inflation pipeline indicator
Wed, Jan 14 14:00 Fed Beige Book High USD pairs Medium-High β€” Qualitative Fed assessment
Thu, Jan 15 02:00 UK GDP Very High GBP/USD Low-Medium β€” Risk sentiment shift
Thu, Jan 15 08:30 US Jobless Claims HIGH USD pairs, EUR/USD Medium-High β€” Labor market health = Fed policy
Fri, Jan 16 02:00 Germany CPI Final Medium EUR/USD Low β€” Final revision, low volatility
Fri, Jan 16 09:15 US Industrial Production Medium-High USD pairs Low-Medium β€” Secondary data

Risk Event Trading Strategy

Avoid Tight Stops Around:
- Tuesday 08:30 EST (CPI)
- Wednesday 08:30 EST (Retail Sales + PPI)
- Thursday 08:30 EST (Jobless Claims)

Widen Stops to: 40-50 pips during high-impact news (vs. typical 25-30 pips)

Pre-Event Positioning:
- Monday Close: Reduce position size ahead of Tuesday CPI
- Tuesday Post-CPI: Enter shorts at 1.1700-1.1720 if rally occurs; enter breakdown shorts below 1.1595 if drop occurs
- Wednesday Post-Retail Sales: Confirm trend direction before adding size
- Thursday-Friday: Take profits; don't hold over weekend unless conviction setup


10. Weekly Momentum View

Strategic Summary:
EURUSD enters the week in Distribution phase, trading at 1.1660 after a -0.42% weekly decline and failed breakout attempt at 1.1745. The 1.1700 psychological level has flipped to resistanceβ€”the week's critical battleground determining whether Distribution accelerates into Markdown (targeting 1.1600 β†’ 1.1550 β†’ 1.1500) or range-bound consolidation extends (1.1600-1.1700 chop). Fundamental headwinds remain pronounced: Trump uncertainty pressuring EUR, ECB dovish bias vs. Fed hawkish stance widening rate differentials, European political instability, and weak growth outlook. The EUR's failure to rally despite DXY sub-100 weakness highlights deep structural fragility. Tuesday's US CPI and Wednesday's Retail Sales/PPI data are this week's primary catalystsβ€”hotter inflation/stronger US data accelerates EUR markdown toward 1.1600 breakdown, while softer data triggers short-covering rally to 1.1700-1.1720 resistance. Week-ahead bias: Bearishβ€”favor short setups at 1.1700-1.1720 resistance (2-4 day holds targeting 1.1620-1.1580) over attempting longs. Breakdown below 1.1595 confirms Markdown phase and opens path toward 1.1550-1.1500. Contrarian longs at 1.1600 support require strong reversal signals (bullish engulfing, volume spike, double bottom) and carry high risk against dominant Distribution momentum. Maintain flexibility: this week determines whether EUR extends Distribution consolidation or transitions into aggressive Markdown phase.

Confidence Level: High (MCM Distribution phase confirmed; multiple fundamental headwinds; clean technical structure)

When momentum aligns, we move. This week, momentum favors EUR bearsβ€”trade with discipline, honor your stops at 1.1700 resistance, and let the market reveal its hand at 1.1600 support.


Report Generated: Monday, January 12, 2026 | Valid Through: Friday, January 16, 2026
MCM Framework: Momentum Cycle Model | Analyst: Momentum FX Content Generation Agent