EUR/USD Consolidating; Strong Over 1.1011, Weak Under 1.0963

The Euro is edging higher against the U.S. Dollar on Monday as investors braced for a busy week of major central bank meetings.

After uncertainty about the war in Ukraine and a dovish surprise by the European Central Bank (ECB) prompted a three-day sell-off, the Euro is trading higher as demand for riskier assets increased and commodity prices drifted back down.

The revival of risk appetite is likely being fueled by reported progress in Russian and Ukrainian peace talks.

At 12:17 GMT, the EUR/USD is trading 1.0952, up 0.0037 or +0.34%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $101.23, down $0.57 or -0.56%.

Gains are likely being limited by expectations that the U.S. Federal Reserve will raise rates at the conclusion of its two-day policy meeting on Wednesday. Investors are pricing in a 93% chance of a 25 basis point hike. Traders are also bracing for as many as seven interest rate hikes this year after Federal Reserve Chairman Jerome Powell last week flagged multiple interest rate increases in 2022.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1121 will change the main trend to up. A move through 1.0806 will signal a resumption of the downtrend.

The first minor range is 1.0806 to 1.1121. Its pivot at 1.0963 is resistance. The second minor range is 1.1121 to 1.0901. Its pivot at 1.1011 is another potential resistance level.

The strongest resistance area is created by a pair of 50% levels at 1.1098 to 1.1151. Inside this zone is the main top at 1.1121.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Monday is likely to be determined by trader reaction to the first pivot at 1.0963.

Bullish Scenario

A sustained move over 1.0963 will indicate the presence of buyers. This could lead to a quick test of 1.1011.

Sellers could come in on the first test of 1.1011, but overtaking this level could trigger an acceleration to the upside with the next key target the resistance cluster at 1.1098, 1.1121 and 1.1151.

Look for sellers on a test of the resistance cluster. Buyers would have to overtake 1.1151 before we can even think about playing the long-side.

Bearish Scenario

A sustained move under 1.0963 will signal the presence of sellers. If this move generates enough downside momentum then look for a break into at least 1.0901.

A trade through 1.0901 will signal the return of sellers. This could create the downside momentum needed to challenge the main bottom at 1.0806. This is another trigger point for an acceleration to the downside.