The Euro is trading higher against the U.S. Dollar on Tuesday after posting a dramatic reversal to the upside earlier in the session. Traders aren’t sure what caused the volatile move with some saying it was in reaction to positive data from the World Health Organization (WHO) regarding treatment for COVID-19.
Others are saying the move was fueled by a report that showed U.S. consumer prices in April took their biggest drop in history going back to at least 1957 as the economy reeled from restrictions imposed to control the coronavirus.
The Bureau of Labor Statistics reported Tuesday that the CPI excluding food and energy prices slumped 0.4%, the steepest monthly drop since records have been kept.
At 13:40 GMT, the EUR/USD is trading 1.0872, up 0.0057 or +0.52%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 1.1018 will signal a resumption of the uptrend. A trade through 1.0727 will change the main trend to down.
The minor trend is up. The minor trend changed to up earlier today when buyers took out 1.0876. This shifted momentum to the upside. A move through 1.0766 will change the minor trend to down.
The main range is 1.0636 to 1.1147. Its retracement zone at 1.0892 to 1.0831 is controlling the near-term direction of the EUR/USD.
The intermediate range is 1.1147 to 1.0727. Its retracement zone at 1.0937 to 1.0987 is a potential upside target.
Daily Swing Chart Technical Forecast
Based on the early price action and the current price at 1.0872, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at 1.0892.
A sustained move over 1.0892 will indicate the buying is getting stronger. This may create the upside momentum needed to challenge the next 50% level at 1.0937.
A sustained move under 1.0892 will signal the presence of sellers. This could lead to a retest of the main Fibonacci level at 1.0831.
The intraday reversal is impressive by it will be meaningless if there is no follow-through to the upside. Additionally, holding inside 1.0892 to 1.0831 will indicate investor indecision.