EUR/USD Forex Technical Analysis – Hawkish Surprise by Fed Could Trigger Break into 1.1664 Main Bottom
The Euro is trading flat against the U.S. Dollar early Wednesday as investors await a key policy decision by the Federal Reserve, due to be released later in the session. Traders are also keeping an eye on the potential financial market upheaval in China with its top-selling property developer Evergrande inching closer to a deadline on Thursday that could lead to a default on a major bond interest payment.
At 02:43 GMT, the EUR/USD is trading 1.1725, down 0.0001 or -0.01%.
The Fed concludes a two-day meeting on Wednesday at 18:00 GMT and a consensus shows that it will stick with broad plans for tapering this year, but will hold off providing details or a timeline for at least a month.
The risk to the Euro is a hawkish surprise by the Fed which could come in the form of a shift in projections that show rate hikes as soon as 2022. Rising Treasury yields could also weigh on the Common Currency.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, but momentum has been trending lower since September 3. A trade through 1.1664 will change the main trend to down. A move through 1.1909 will signal a resumption of the uptrend.
The minor trend is also down. This is controlling the momentum. A trade through 1.1846 will change the minor trend to up. A move through 1.1700 will indicate the selling pressure is getting stronger.
The short-term range is 1.1664 to 1.1909. The EUR/USD is currently trading on the weak side of its retracement zone at 1.1758 to 1.1787, making it resistance.
The minor range is 1.1909 to 1.1700. Its retracement zone at 1.1805 to 1.1829 is another potential resistance zone.
Daily Swing Chart Technical Forecast
The early direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to 1.1725.
A sustained move under 1.1725 will indicate the presence of sellers. If this move creates enough downside momentum, then look for a potential test of the minor bottom at 1.1700.
Taking out 1.1700 will indicate the selling pressure is getting stronger. This could trigger an acceleration into the August 20 main bottom at 1.1664. This is the last potential support before the November 4, 2020 main bottom at 1.1603.
A sustained move over 1.1725 will signal the presence of buyers. This could generate the upside momentum needed to challenge the Fibonacci level at 1.1758. Sellers could come in following the first test of this level.
Overtaking 1.1758 will indicate the buying is getting stronger with the next targets a pair of 50% levels at 1.1787 and 1.1805.