EUR/USD Forex Technical Analysis – Light Volume Ahead of U.S. CPI Report

The Euro is trading slightly lower early Tuesday as investors prepare for today’s U.S. consumer inflation report, due to be released at 1230 GMT.

At 0655 GMT, the EUR/USD is at 1.2329, down 0.0005 or -0.05%.

On Tuesday, investors will get the opportunity to react to the latest U.S. data on consumer inflation. It is expected to come in at 0.2%, down from the previously reported 0.5%. Core CPI is also expected to rise by 0.2%, down from the previously reported 0.3%.

This week’s U.S. inflation data could generate more uncertainty for investors. Weaker-than-expected consumer inflation data on Tuesday and producer inflation data on Wednesday could give stocks a boost while putting further pressure on the struggling U.S. Dollar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.2446 will change the main trend to up. A move through 1.2272 will signal a resumption of the downtrend.

The main range is 1.2555 to 1.2153. Its retracement zone is 1.2354 to 1.2401. This zone is acting like resistance. It also appears to be controlling the near-term direction of the Forex pair.

The short-term range is 1.2153 to 1.2446. Its 50% level or pivot at 1.2259 is the primary downside target. It acted like support late last week.

The major support is the long-term 50% level at 1.2166.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the EUR/USD today is likely to be determined by trader reaction to the 50% level at 1.2354.

A sustained move under 1.2354 will indicate the presence of sellers. If this generates enough downside momentum, we could see a test of 1.2272. Taking out this bottom will change the main trend to down and likely lead to a drive into 1.2259.

The 50% level at 1.2259 is the trigger point for an acceleration to the downside with the next major targets coming in at 1.2166 and 1.2153.

A sustained move over 1.2354 will signal the presence of buyers. Overtaking this level could trigger a move into 1.2401 then 1.2446.

The trigger point for an acceleration to the upside is 1.2446. If buyers can take out this level with conviction, we could see an eventual move into 1.2555 then 1.2569.