The Euro is trading flat against the U.S. Dollar on Monday, following a similar pattern in U.S. Treasury yields. The price action suggests that gains in the U.S. Dollar are being capped as investors may have already priced in higher inflation. Meanwhile, the Euro is being supported as investors throw their support toward the reopening of the European economy.
At 12:46 GMT, the EUR/USD is trading 1.2146, up 0.0002 or +0.01%.
Late last week, data from the Commodity Futures Trading Commission (CFTC) showed speculators increased their bets against the dollar the week-ending May 7, mostly by adding to bets on the Euro and to a lesser extent the Sterling.
In other news, Fed minutes, from an April meeting that predated the inflation data surprise last week, are due on Wednesday and are the next market focus for clues on the central bank’s thinking. The minutes are expected to reiterate that policymakers consider the pick up in inflation to be transitory.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 1.2181 will signal a resumption of the uptrend. Taking out 1.2052 will change the main trend to down.
The minor range is 1.2181 to 1.2052. Its 50% level or pivot at 1.2116 is support.
The second minor range is 1.1986 to 1.2181. Its 50% level at 1.2084 is additional support.
The main retracement zone support is 1.2037 to 1.1973. This zone is controlling the near-term direction of the EUR/USD.
Daily Swing Chart Technical Forecast
The direction of the EUR/USD on Monday is likely to be determined by trader reaction to the pivot at 1.1216.
A sustained move over 1.2116 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the main bottom at 1.2181. This is a potential trigger point for an acceleration to the upside with the February 25 main top at 1.2243 the next likely upside target.
A sustained move under 1.2116 will signal the presence of sellers. This could trigger the start of a labored break with potential downside targets coming in at 1.2084, 1.2052 and 1.2037. The latter is a potential trigger point for an acceleration to the downside.