The Euro is up sharply against the U.S. Dollar at the mid-session on Monday as investors looked to incoming global economic data and U.S. corporate earnings to gauge whether the markets’ guarded optimism on the economic outlook is justified.
Also looming large for the single currency was a planned European Union summit on July 17-18, where leaders need to bridge gaps on long-term budgets. Investors will also watch for whether an agreement on a proposed 750 billion Euro recovery fund for the bloc emerges.
At 15:08 GMT, the EUR/USD is trading 1.1366, up 0.0068 or +0.60%.
The price action indicates investors are betting on the approval of the funds. However, there should still be a heated debate because some believe the economy is already in recovery and they see no need for additional funding.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was confirmed just a short while ago when buyers took out 1.1371. The main trend will change to down on a move through 1.1185.
The minor trend is also up. A move through 1.1255 will change the minor trend to down. This will shift momentum to the downside.
The nearest support is a pair of 50% levels at 1.1295 and 1.1278.
Daily Swing Chart Technical Forecast
The trend and momentum are clearly to the upside on Monday. There is also a lot of room between the current price at 1.1366 and the next main top at 1.1422, which suggests we could see an acceleration to the upside.
If the rally through 1.1371 is bona fide then buyers should keep adding to long positions. If the breakout through this level was triggered by buy stops then we could see an intraday pullback below it. This is normal. It only means investors are more willing to buy dips than strength.
With this type of formation, the biggest fear for buyers should be a closing price reversal top.
For a look at all of today’s economic events, check out our economic calendar.