EUR/USD Forex Daily Technical Analysis – Trade Through 1.1901 Signals Resumption of Uptrend

The Euro closed lower against the U.S. Dollar on Friday. Volume was well-below average ahead of the long-holiday weekend. Despite the low volume, the two dominate moves were true and in reaction to fresh economic news and not just reactions to the thin trading conditions.

The EUR/USD settled the session at 1.1859, down 0.0014 or -0.12%.

Early in the session, the Euro declined after Catalan separatists won a regional election, stoking concerns about the possible break-up of the Euro Zone’s fourth-largest economy. The single-currency also weakened on the news that the U.S. Senate approved a bill to fund the federal government through January 19 and avert agency shutdowns ahead of a Friday midnight deadline.

The EUR/USD was able to regain some of its losses later in the session in reaction to weaker than expected U.S. economic data. Core Durable Goods Orders fell 0.1%, below the 0.5% forecast. Durable Goods Orders rose 1.3%, below the 2.1% estimate.

The Core PCE Price Index came in at 0.1%, matching the forecast. Personal Spending increased 0.6%, beating the 0.5% forecast. However, the previous month was revised lower to 0.2%. Finally, Revised University of Michigan Consumer Sentiment was 95.9, below the 97.1 estimate.

Daily Swing Chart Analysis

The main trend is up according to the daily swing chart. The trend turned up on December 20 when buyers took out the previous main top at 1.1862. The new swing bottom is 1.1736.

A trade through last week’s high at 1.1901 will signal a resumption of the uptrend. If this creates enough upside momentum, we could see a drive into 1.1940 then 1.1961. However, this may be difficult to accomplish if the volume is extremely low.

Daily Swing Chart Forecast

The EUR/USD is being controlled by major retracement levels at 1.1823 and 1.1886. Trader reaction to these levels will determine the near-term direction of the market.

A sustained move over 1.1886 will indicate the presence of buyers. If this move creates enough upside momentum then look for a challenge of 1.1901. This is another trigger point for an acceleration to the upside.

A sustained move under 1.1823 will signal the presence of sellers. The daily chart indicates there is plenty of room to the downside if this level fails. The next major target is a 50% level at 1.1757.