EUR/USD Building Momentum for Test of 1.1098 – 1.1151

The Euro is trading nearly flat ahead of the U.S. opening on Thursday after giving up earlier gains. Volume appears to be on the light side as traders await news on the progress of talks between Russia and Ukraine. Meanwhile, traders continue to assess yesterday’s Federal Reserve decision to raise rates and tackle inflation, which failed to affect the market as the bar for a hawkish surprise was high.

At 10:44 GMT, the EUR/USD is trading 1.1038, up 0.0003 or +0.03%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $102.46, up $0.82 or +0.81%.

New Fed projections showed policymakers ready to shift their inflation fight into higher gear; most of them see the federal funds rate rising to a range between 1.75% and 2% by the end of 2022. The news failed to rattle investors who had already priced in a series of Fed rate hikes.

In other news, although the fighting between Russia and the Ukraine continues, both sides continue to report progress at peace talks. Moscow said negotiations resumed on Thursday by video-link for a fourth straight day, discussing military, political and humanitarian issues.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but the formation of the secondary higher bottom suggests the trend may be getting ready to turn higher.

A trade through 1.1121 will change the main trend to up. A move through 1.0901 will signal a resumption of the downtrend.

The EUR/USD is trading on the strong side of a pair of 50% levels at 1.1011 and 1.0963, making them support.

On the upside, the nearest resistance is a pair of 50% levels at 1.1098 and 1.1151. The latter is a potential trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Thursday is likely to be determined by trader reaction to the pivot at 1.1011.

Bullish Scenario

A sustained move over 1.1011 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the first resistance level at 1.1098, followed closely by the main top at 1.1121.

Taking out 1.1121 will change the main trend to up with 1.1151 the next target. The daily chart indicates there is plenty of room to the upside over this level.

An acceleration over 1.1151 is possible with the main top at 1.1389 the next likely target.

Bearish Scenario

A sustained move under 1.1011 will signal the presence of sellers. The first downside target is 1.0963. A failure to hold this level should lead to a test of the main bottom at 1.0901. Taking out this level will signal a resumption of the downtrend with 1.0806 the next major target.