EUR/USD Forex Technical Analysis – Weakens Under 1.1690, Strengthens Over 1.1719

The Euro is inching higher early Thursday after plunging the previous session as traders interpreted the Federal Reserve’s monetary policy statement and comments from Fed chief Jerome Powell as hawkish. The news also pushed Treasury yields higher which made the U.S. Dollar more attractive than a basket of major currencies.

At 01:54 GMT, the EUR/USD is trading 1.1694, up 0.0004 or +0.04%.

On Wednesday afternoon, the Fed held benchmark interest rates near zero as widely expected, but also indicated that rate hikes could be coming sooner than expected, and it significantly cut its economic outlook for this year.

Helping to drive the Euro lower were two factors. Firstly, Fed Chairman Jerome Powell, at his post-meeting news conference, said the committee is ready to move. This suggests a sense of urgency.

Secondly, more members now see the first rate hike happening in 2022. In June, when members last released their economic projections, a slight majority put that increase into 2023. That puts the Fed on-track to raise rates before the European Central Bank (ECB). Advantage U.S. Dollar.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the main bottom at 1.1664 will reaffirm the downtrend. Taking out 1.1755 will change the main trend to up.

The main range is 1.1664 to 1.1909. The EUR/USD is currently trading on the weak side of its retracement zone at 1.1758 to 1.1787, making it resistance.

The short-term range is 1.1909 to 1.16835. Its retracement zone at 1.1796 to 1.1823 is another potential upside target. This zone will move down as the EUR/USD moves lower.

The new minor range is 1.1755 to 1.16835. Its 50% level or pivot at 1.1719 is the nearest resistance. This level will move lower if traders extend the selling through 1.16835.

Daily Swing Chart Technical Forecast

The early direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1690.

 Bearish Scenario

A sustained move under 1.1690 will indicate the presence of sellers. The first downside target is the intraday low at 1.1683.

Taking out 1.1683 will indicate the selling pressure is getting stronger. This could trigger another acceleration to the downside with the next target the August 20 main bottom at 1.1664.

Bullish Scenario

A sustained move over 1.1690 will signal the presence of buyers. If this move creates enough upside momentum then look for a surge into the minor pivot at 1.1719.

Since the main trend is down, look for new sellers on the first test of 1.1719. Overcoming it could create enough upside momentum to challenge the resistance cluster at 1.1755 – 1.1758.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.