EUR/USD: Edging Closer to 1.0806 March Bottom

The Euro is trading nearly flat on Friday after recovering from an early session setback. The stronger U.S. Dollar is fueling the selling pressure.

The greenback is being supported by the prospect of a more aggressive pace of Federal Reserve interest rate hikes, while the single-currency is being weighed down by investor concerns about the economic costs of war in Ukraine and a potentially nail-biting election in France, according to Reuters.

At 11:09 GMT, the EUR/USD is trading 1.0879, down 0.0001 or -0.01%. On Thursday, the Invesco CurrencyShares Euro Trust settled at $100.78, down $0.26 or -0.26%.

In other news, meeting minutes from the European Central Bank (ECB) published Thursday suggested its policy makers are keen to act to combat inflation, but the Euro Zone has so far taken a more cautious tack than other central banks, weakening the Euro, Reuters wrote.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 1.0848 will signal a resumption of the downtrend.

A move through 1.1185 will change the main trend to up. This is highly unlikely but due to the prolonged sell-off in terms of price and time, the EUR/USD is ripe for a closing price reversal bottom.

The minor trend is also down. A trade through 1.0939 will change the minor trend to up. This will shift momentum.

The nearest resistance is a 50% level at 1.0972.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Friday will be determined by trader reaction to 1.0880.

Bearish Scenario

A sustained move under 1.0880 will indicate the presence of sellers. Taking out the intraday low at 1.0848 will indicate the selling is getting stronger. This move could create the downside momentum needed to challenge the March 7 main bottom at 1.0806.

Bullish Scenario

A sustained move over 1.0880 will signal the presence of buyers. This move could trigger a wave of profit-taking and short-covering. If strong enough, we could see a test of the minor top at 1.0939.

Taking out 1.0939 will indicate the buying is getting stronger. This will also shift momentum to the upside.

Side Notes

A close over 1.0880 will form a potentially bullish closing price reversal bottom. If confirmed, we could see the start of a 2 to 3 day counter-trend retracement.