EUR/USD Forex Technical Analysis – Enough Downside Pressure Building for Short-Term Test of 1.1787 to 1.1758

The Euro tumbled against the U.S. Dollar on Tuesday, moving further off a near-one month high reached last week, as rising U.S. Treasury yields helped make the greenback a more attractive asset. Traders also took profits and lightened long positions ahead of Thursday’s European Central Bank (ECB) meeting.

On Tuesday, the EUR/USD settled at 1.1842, down 0.0027 or -0.23%.

The U.S. Dollar also benefitted from rising U.S. Treasury yields before the U.S. government is due to sell $120 billion in new supply this week, including $58 billion in three-year notes, $38 billion in 10-year notes and $24 billion in 30-year bonds.

In other news, the ECB is seen debating a cut in stimulus at its meeting on Thursday, with analysts expecting purchases under the ECB’s Pandemic Emergency Purchase Programme (PEPP) falling possibly as low as 60 billion Euros a month from the Current 80 billion.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1909 will signal a resumption of the uptrend. A move through 1.1664 will change the main trend to down.

The main range is 1.1975 to 1.1664. The EUR/USD is currently trading inside its retracement zone at 1.1820 to 1.1856. This zone is controlling the near-term direction of the Forex pair.

The short-term range is 1.1664 to 1.1909. Its retracement zone at 1.1787 to 1.1758 is the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the main Fibonacci level at 1.1856.

Bullish Scenario

A sustained move over 1.1856 will indicate the presence of buyers. The first potential upside target is a minor pivot at 1.1875. This is followed by the main top at 1.1909.

Taking out 1.1909 will signal a resumption of the uptrend with 1.1941 the next likely upside target.

Bearish Scenario

A sustained move under 1.1856 will signal the presence of sellers. The first downside target is a 50% level at 1.1820. Look for buyers on the first test of this level.

If 1.1820 fails as support then look for the selling pressure to extend into the short-term retracement zone at 1.1787 to 1.1758. This is a potential value area so we’re going to be watching for bigger buying volume on a test of this area.