EUR/USD Forex Technical Analysis – First Downside Target 1.1354, Followed by 1.1319

The Euro is under pressure against the U.S. Dollar late Thursday after the release of another weak U.S. Weekly Initial Claims report and a drop in U.S. equities increased the greenback’s appeal as a safe-haven asset. Losses may have been limited, however, by the U.S. retail sales report for June that came in better than expected.

At 19:40 GMT, the EUR/USD is trading 1.1381, down 0.0031 or -0.27%.

The Euro moved very little after the European Central Bank (ECB) left monetary policy unchanged. The meeting was seen as something of a non-event by analysts, who said it was overshadowed by the EU summit, at which European countries are expected to vote on a 750 billion Euro ($856 billion) recovery fund to revive Euro Area growth.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1452 will signal the resumption of the uptrend. The main trend will change to down when sellers take out the last main bottom at 1.1185.

The minor trend is also up. A new minor top was formed at 1.1452. A trade through 1.1255 will change the minor trend to down. This will also shift momentum to the downside.

The first minor range is 1.1255 to 1.1452. Its 50% level at 1.1354 is the first downside target.

The short-term range is 1.1185 to 1.1452. Its retracement zone at 1.1319 to 1.1287 is potential support. Since the main trend is up, buyers are likely to come in on test of this zone.

Short-Term Outlook

The EUR/USD is likely to remain under pressure on Friday as EU officials debate the need for additional stimulus. The meeting is designed to bridge differences and agree on a 750-billion-Euro recovery fund deemed a “game changer” to lift the bloc out of recession.

The spending plan, which brings the EU closer to a fiscal union by introducing shared debt liability and mostly grants rather than loans, has been instrumental in beefing up confidence in the region.

The outcome of the Friday-Saturday summit in Brussels is expected to set the direction for markets over coming months.

The first test for buyers will come following a break into 1.1354. This is a minor level, however. If it fails then look for the selling to possibly extend into 1.1319 to 1.1287. This is a value zone, which could attract strong buying interest.

If the news is bullish then look for an acceleration over 1.1452. This could lead to a test of 1.1496 to 1.1514.