The Euro is trading lower for a third day this week as investors continue to react to rising Treasury yields and expectations of even further rate hikes by the Fed due to the strengthening economy. Essentially, it’s the divergence between monetary policies that is driving the price action. The Fed is hawkish and the European Central Bank is dovish.
At 1015 GMT, the EUR/USD is trading 1.1796, down 0.0041 or -0.35%.
Later today, investors will have a chance to react to a slew of economic data including Building Permits, Housing Starts, Capacity Utilization, Industrial Production and Mortgage Delinquencies. Stronger-than-expected data will increasing the chances of a third rate hike by the Fed.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The new main top is 1.1998. A trade through this level will change the main trend to up.
Taking out 1.1822 reaffirmed the downtrend. If this creates enough downside momentum, we could see a test of a pair of main bottoms at 1.1736 to 1.1717 over the near-term.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the EUR/USD is likely to be determined by trader reaction to the previous main bottom at 1.1822.
A sustained move under 1.1822 will indicate the selling is getting stronger. If it continues to increase than look for a test of 1.1736 to 1.1717. We could see a technical bounce due to profit-taking on a test of this area.
Retaining and sustaining a move over 1.1822 will signal the return of buyers. This could put the EUR/USD in a position to form a closing price reversal bottom if it closes over 1.1838.