EUR / USD - despite weakening political risks in Germany, the round level 1.23 was breached

Unexpectedly, EUR / USD lost more than 150 pips at Wednesday session, with no significant news in the economic calendar. Of course there were expectations that the decline would continue, but at least after some corrective upward rollbacks off the round of 1.23 level, but this significant level was broken by bears at once and without the slightest resistance. The main impact on the price now come no from macroeconomic data, which simply does not appear, but other factors, including political ones.

In USA, there have finally been shifts in the key opposition of Republicans and Democrats, the parties reached an agreement on financing the state budget until March 1, 2019. This is undoubtedly good news for the dollar, which has repeatedly been pressured amid concerns of the protracted confrontation of political forces in the United States.

Yesterday, positive statements were also made by the representatives of the Federal Reserve about the support of the rate for further raising interest rates against the backdrop of strong US economic growth. After the positive data on the labor market and the confident growth of wages, which can accelerate the inflation processes in the country, such statements by the representatives of the Federal Reserve raise the expectations of investors about the rate increase already at the meeting in March.

However, positive news for the euro came from EU but in general were ignored by the markets. The political crisis in Germany seems to be drawing to a close, as reports of an agreement between the CDU / CSU and the SPD have been received.

Nevertheless, the general fundamental background on this currency instrument can not be called negative. The situation is rather close to neutral, so today we can see the balancing of the market and a moderate recovery of the currency pair. Now, the main defense line has shifted, it is the main support level around at 1.2225-1.2185.

The technical picture indicates continuation of the corrective wave with a new target at 1.2185. The price broke through support at 1.2300 and was able to gain a foothold under it, which opens the way for the continuation of the  further decline. However the support zone looks strong and careful longs can be interesting in this situation.

Trading recommendations: longs in the area of ​​1.2185.