EUR/USD Forex Technical Analysis – Drops on Treasury Yield Rise

The Euro closed down on Friday as the U.S. Dollar regained strength on the back of a sharp rise in U.S. Treasury yields. The move was fueled by a CNBC and Bloomberg News report that said China had offered to increase U.S. imports for six years in an effort to eliminate the U.S. trade deficit with the world’s second largest economy.

On Friday, the EUR/USD settled at 1.1363, down 0.0026 or -0.23%. The Forex pair ended the week down 0.0107 or -0.93%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on January 10.

A trade through 1.1309 will change the main trend to down. A move through 1.1570 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is down. This is contributing to the downside momentum. Friday’s price action created a new minor top at 1.1413. A trade through this level will change the minor trend to up and signal a shift in momentum.

The main range is 1.1816 to 1.1216. Its retracement zone at 1.1516 to 1.1587 is resistance. This zone stopped the rally at 1.1570 earlier in the month.

The short-term range is 1.1309 to 1.1570. Its retracement zone is 1.1409 to 1.1440. Trading below this zone is contributing to the downside momentum. This area is new resistance.

Daily Swing Chart Technical Forecast

The daily swing chart indicates downside pressure as long as the EUR/USD remains on the bearish side of the Fibonacci level at 1.1409.

Bullish Scenario

Overtaking and sustaining a move over 1.1409 will signal the return of buyers. This could generate the momentum needed to challenge the 50% level at 1.1440. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 1.1409 will indicate the presence of sellers. If this move can generate enough downside momentum then look for a potential acceleration into the main bottom at 1.1309. Taking out this bottom will change the main trend to down. This could trigger an acceleration to the downside with the December 14 bottom at 1.1270 the next target.