Counter-Trend EUR/USD Buyers Targeting 1.1387 – 1.1407

The Euro is edging higher against the U.S. Dollar on Tuesday after reports some Russian troops in areas near Ukraine have started returning to their bases. The news drove investors out of safe-haven U.S. Dollar positions.

Some troops in Russia’s military districts adjacent to Ukraine are returning to their bases after completing drills, Russia’s defense ministry said on Tuesday, a move that could de-escalate frictions between Moscow and the West.

At 14:31 GMT, the EUR/USD is trading 1.1355, up 0.0047 or +0.42%. The Invesco CurrencyShares Euro Trust ETF (FXE) is trading $105.36, up $0.51 $0.42 or +0.49%.

In U.S. economic news, prices at the wholesale level jumped twice the expected level in January as inflation pressures were unabated to start the year, the Labor Department said Tuesday.

The producer price index, which measures final-demand goods and services, increased 1% for the month, against the Dow Jones estimate for 0.5%. Over the past 12 months the gauge rose an unadjusted 9.7%, close to a record in data going back to 2010.

Excluding food, energy and trade services, so-called core PPI increased 0.9% for the month, well ahead of the 0.4% estimate. For the 12-month period, the measure increased 6.9%. Both core and headline PPI gains over the year were 0.1 percentage point lower than the record levels hit in December 2021.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1280 will signal a resumption of the downtrend. A move through 1.1495 will change the main trend to up.

The short-term range is 1.1122 to 1.1495. Its retracement zone at 1.1308 to 1.1265 is support. This zone stopped the selling on Monday at 1.1280.

The minor range is 1.1495 to 1.1280. Its 50% level at 1.1387 is the first resistance.

The main range is 1.1692 to 1.1122. Its retracement zone at 1.1407 to 1.1475 is the key resistance zone controlling the near-term direction of the single-currency.

The combination of the two 50% levels creates a resistance cluster at 1.1387 to 1.1407. Since the main trend is down, look for sellers on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Tuesday is likely to be determined by trader reaction to 1.1308.

Bullish Scenario

A sustained move over 1.1308 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into 1.1387 to 1.1407. Look for sellers on the first test of this area.

Overtaking 1.1407 is a potential trigger point for an acceleration to the upside with 1.1475 the next likely target.

Bearish Scenario

A sustained move under 1.1308 will signal the presence of sellers. This could trigger a quick break into 1.1280, followed closely by 1.1265. The latter is a potential trigger point for an acceleration into 1.1122.