The EUR/USD is trading higher at the mid-session after taking out last week’s high at 1.0719 and a resistance angle. Traders are following through to the upside following Friday’s strong close. Trump’s inauguration speech seems to be fueling the rally. Trump’s speech had an “America first” theme which suggested a protectionism attitude. Investors may have been looking for more details about his policies regarding fiscal spending, tax cuts and relaxed regulations.
The weakness in the U.S. Dollar against the Euro suggests Trump’s priorities seem to be about protecting America’s interests which may mean tariffs and trade wars rather than domestic growth which would have probably led to higher interest rates and a stronger dollar.
The main trend is up according to the daily swing chart. Today’s upside momentum appears to have put the EUR/USD on a path towards the December 9 main top at 1.0872. The trend is in no position to turn down, but the market is in the window of time for a potentially bearish closing price reversal top.
The main range is 1.0872 to 1.0339. Its retracement zone is 1.0668 to 1.0606. The EUR/USD is currently trading on the strong side of this zone, putting the Forex pair in a position to move higher. This zone is controlling the longer-term direction of the market.
Based on the current price at 1.0728, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the long-term downtrending angle at 1.0722.
A sustained move over 1.0722 will signal the presence of buyers. This could generate the upside momentum needed to challenge the next downtrending angle at .10840. This is the last potential resistance angle before the 1.0872 main top.
A sustained move under 1.0722 will indicate the presence of sellers. This could change investor sentiment to down with the next target the main Fibonacci level at 1.0668. A failure at this level could lead to a test of the uptrending angle at 1.0619.
Watch the price action and read the order flow at 1.0722 today. Trader reaction to this angle will set the tone for the rest of the session.