James Hyerczyk
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The Euro is edging lower early Monday as investors prepare for Thursday’s European Central Bank interest rate and monetary policy announcements and Friday’s important Euro Zone PMI reports. Later today, investors will get the opportunity to react to the latest Euro Zone Current Account and German Buba Monthly reports.

At 04:35 GMT, the EUR/USD is trading 1.1958, down 0.0024 or -0.20%.

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According to the Financial Times, “When ECB policymakers meet on Thursday, they will be painfully aware that the Eurozone economy is still being held back by lockdowns to tackle rising coronavirus infections while the U.S., China and the U.K. are reopening and rebounding faster.”

Christine Lagarde, ECB president, last week compared the Eurozone with a patient walking out of intensive care with the support of two crutches.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up last week when buyers took out a pair of swing tops at 1.1989 and 1.1990, however, there wasn’t much of a follow-through on the move with the common currency stopping at 1.1995. A trade through this level will signal a resumption of the uptrend. Meanwhile, the main trend will change to down on a move through the nearest main bottom at 1.1704.

The short-term range is 1.2243 to 1.1704. Its retracement zone at 1.1974 to 1.2037 is resistance. This zone stopped the rally last week at 1.1995.

The main range is 1.1603 to 1.2349. The EUR/USD is currently trading inside its retracement zone at 1.1976 to 1.1888. This area is controlling the near-term direction of the Forex pair.

The minor range is 1.1704 to 1.1995. Its retracement zone at 1.1849 to 1.1815 is another potential downside target area.


Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Monday is likely to be determined by trader reaction to the 50% level at 1.1976.

Bearish Scenario

A sustained move under 1.1976 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for the selling to possibly extend into the Fibonacci level at 1.1888, followed by the retracement zone at 1.1849 to 1.1815. Since the main trend is up, buyers are likely to come in on a test of this area.

Bullish Scenario

A sustained move over 1.1976 will signal the presence of buyers. Taking out 1.1995 will reaffirm the uptrend. This could trigger a surge into 1.2037. This level is a potential trigger point for an acceleration to the upside.

For a look at all of today’s economic events, check out our economic calendar.
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