The Euro is continuing to slide lower on Wednesday in reaction to Tuesday’s hawkish comments from U.S. Federal Reserve Chairman Jerome Powell about the strength of the U.S. economy and ahead of his second day of congressional testimony on Wednesday.
Powell also downplayed the risks of an escalating trade conflict between China and the United States, thereby reasserting the notion that the Fed will continue to raise interest rates this year and into next year.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down when sellers took out the last swing bottom at 1.1613. The new main top is 1.1746. A trade through this level will change the main trend to up.
The short-term range is 1.1527 to 1.1791. Its retracement zone at 1.1650 to 1.1617 is currently being tested. This zone appears to be controlling the short-term price action.
The main range is 1.1851 to 1.1509. If there is a technical bounce after the change in trend to down then its retracement zone at 1.1680 to 1.1720 could become an upside target.
Daily Swing Chart Technical Forecast
Based on the early trade, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the short-term Fibonacci level at 1.1617.
A sustained move over 1.1617 is likely to indicate the presence of buyers, or that sellers are reluctant to short weakness at current price levels. This could lead to a stair step rally with potential upside targets at 1.1650 and 1.1680.
A sustained move under 1.1617 will signal the return of sellers. This could lead to a second round of selling pressure today. A sustained move under today’s intraday low at 1.1601 will signal that the selling is getting stronger.
The daily chart is wide open under 1.1601 so we could see an acceleration to the downside under this level with 1.1527 the next major target.
Basically, look for a potential acceleration to the downside under 1.1601 or a labored short-covering rally over 1.1617.