The Euro surged to its highest level since March 4 on Monday, with Treasury yields near their lowest levels in five weeks, after the U.S. Federal Reserve reiterated its view that any spike in inflation was likely to be temporary.
At 12:22 GMT, the EUR/USD is trading 1.2033, up 0.0051 or +0.43%.
The Euro rose above 1.200 for the first time in over six weeks, touching a high of 1.2048 by midday in London. The European Central Bank meets on Thursday was internal divisions over the pace of bond buying, extended COVID-19 lockdowns and potential delays to the EU recovery fund forming the backdrop, Reuters reported.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the recently formed main top at 1.1995. A new main bottom was formed at 1.1943. A trade through this level will change the main trend to down.
The short-term range is 1.2243 to 1.1704. The EUR/USD is currently testing its retracement zone at 1.1974 to 1.2037.
The Forex pair is also trading on the strong side of the main retracement zone at 1.1976 to 1.1888. This zone is controlling the near-term direction of the EUR/USD.
Combining these two retracement zones creates a potential support cluster at 1.1976 to 1.1974.
Daily Swing Chart Technical Forecast
The direction of the EUR/USD into the close on Monday is likely to be determined by trader reaction to the Fibonacci level at 1.2037.
A sustained move over 1.2037 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the next minor top at 1.2113. This is a potential trigger point for an acceleration to the upside.
A sustained move under 1.2037 will signal the presence of sellers. This could trigger a break into the support cluster at 1.1976 – 1.1974. Since the main trend is up, buyers could come in on a test of this area. If 1.1974 fails as support then look for the selling to possibly extend into 1.1888.