The Euro is trading lower on Tuesday as investors continue to make adjustments to the rise in U.S. Treasury yields and the possibility the Fed may have to make an adjustment to its dovish outlook following last Friday’s robust U.S. Non-Farm Payrolls report and stronger-than-expected ISM Manufacturing PMI report. On Monday, Cleveland Fed President Loretta Mester said that the central bank may need to raise interest rates a bit further if the economy does well.
At 12:57 GMT, the EUR/USD is trading 1.1421, down 0.0015 or -0.13%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 1.1514 will change the main trend to up. A move through 1.1289 will reaffirm the downtrend.
The minor trend is up. A move through 1.1407 will change the minor trend to down. This will shift momentum to the downside.
On January 30, the EUR/USD formed a closing price reversal top. This potentially bearish chart pattern was confirmed on Monday.
The main range is 1.1570 to 1.1289. Its retracement zone at 1.1429 to 1.1463 is controlling the near-term direction of the Forex pair. The EUR/USD is trading below this zone, indicating increasing selling pressure. Treat the zone like resistance.
The short-term range is 1.1289 to 1.1514. Its retracement zone at 1.1417 to 1.1386 is the primary downside target. It was tested earlier today at 1.1411. Aggressive counter-trend buyers could trigger a short-covering rally on the first test.
Daily Technical Forecast
Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the short-term 50% level at 1.1417.
A sustained move over 1.1417 will indicate the presence of buyers. The next target is 1.1429. Buying can increase over this level with the next target the uptrending Gann angle at 1.1429. Look for an extension of the rally over this angle with 1.1463 the next target.
A sustained move under 1.1417 will signal the presence of sellers. The daily chart is wide open under this level so don’t be surprised by an acceleration to the downside with 1.1386 the next target, followed closely by an uptrending Gann angle at 1.1359.
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