EUR/USD Forex Technical Analysis – Enough Downside Pressure Building

The Euro tumbled against the U.S. Dollar on Tuesday, moving further off a near-one month high reached last week, as rising U.S. Treasury yields helped make the greenback a more attractive asset. Traders also took profits and lightened long positions ahead of Thursday’s European Central Bank (ECB) meeting.

On Tuesday, the EUR/USD settled at 1.1842, down 0.0027 or -0.23%.

The U.S. Dollar also benefitted from rising U.S. Treasury yields before the U.S. government is due to sell $120 billion in new supply this week, including $58 billion in three-year notes, $38 billion in 10-year notes and $24 billion in 30-year bonds.

In other news, the ECB is seen debating a cut in stimulus at its meeting on Thursday, with analysts expecting purchases under the ECB’s Pandemic Emergency Purchase Programme (PEPP) falling possibly as low as 60 billion Euros a month from the Current 80 billion.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1909 will signal a resumption of the uptrend. A move through 1.1664 will change the main trend to down.

The main range is 1.1975 to 1.1664. The EUR/USD is currently trading inside its retracement zone at 1.1820 to 1.1856. This zone is controlling the near-term direction of the Forex pair.

The short-term range is 1.1664 to 1.1909. Its retracement zone at 1.1787 to 1.1758 is the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the main Fibonacci level at 1.1856.

Bullish Scenario

A sustained move over 1.1856 will indicate the presence of buyers. The first potential upside target is a minor pivot at 1.1875. This is followed by the main top at 1.1909.

Taking out 1.1909 will signal a resumption of the uptrend with 1.1941 the next likely upside target.

Bearish Scenario

A sustained move under 1.1856 will signal the presence of sellers. The first downside target is a 50% level at 1.1820. Look for buyers on the first test of this level.

Story continues

If 1.1820 fails as support then look for the selling pressure to extend into the short-term retracement zone at 1.1787 to 1.1758. This is a potential value area so we’re going to be watching for bigger buying volume on a test of this area.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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