The Euro is trading lower as the U.S. Dollar firmed on Wednesday, rising form a seven-week low hit overnight, as broad-based weakness in stock markets triggered by a resurgence of COVID-19 cases in countries from India to Japan fueled renewed appetite for the greenback. We’re also seeing some position-squaring and profit-taking ahead of the European Central Bank policy meeting on Thursday.
At 11:40 GMT, the EUR/USD is trading 1.2007, down 0.0029 or -0.24%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 1.1943 will change the main trend to down. A move through 1.2080 will signal a resumption of the uptrend.
The short-term range is 1.2243 to 1.1704. The EUR/USD is currently trading inside its retracement zone at 1.1974 to 1.2038.
The main range is 1.1603 to 1.2349. Its retracement zone at 1.1976 to 1.1888 is potential support. This zone is controlling the near-term direction of the EUR/USD.
The best potential support area is the price cluster at 1.1976 to 1.1974.
Daily Swing Chart Technical Forecast
The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the short-term Fibonacci level at 1.2038.
A sustained move under 1.2038 will indicate the presence of sellers. The first downside target is the support cluster at 1.1976 to 1.1974. Since the main trend is up, buyers are likely to come in on a test of this area.
If 1.1974 fails as support then look for the selling to possibly extend into the main bottom at 1.1943. Taking out this level will change the main trend to down. This could trigger a further break into the main Fibonacci level at 1.1888.
A sustained move over 1.2038 will signal the presence of buyers. This could trigger a surge into a minor top at 1.2080, followed by another minor top at 1.2113.
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