EUR/USD Forex Technical Analysis – On Pace to Challenge 1.1185 by Week-Ending Nov. 23

The Euro finished lower last week against the U.S. Dollar. The selling was fueled by signs of a weakening Euro Zone economy, simmering problems between the European Union and the Italian government and the hawkish U.S. Federal Reserve. The single-currency is rapidly approaching price levels not seen since late May/early June 2017.

The EUR/USD finished the week at 1.1335, down 0.0053 or -0.46%.

The EUR/USD ended the week in a position to challenge a 16-month low after the U.S. Federal Reserve kept interest rates steady and reaffirmed its monetary tightening stance, setting up for a fourth interest rate hike later this year in December.

The Euro was also pressured after the standoff between the European Union and Rome over the budget deficit escalated this week after the European Commission forecast that the Italian economy would grow more slowly than the Italian government thinks in the next two years, leading to much bigger deficits than assumed by the government.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through 1.1301 will signal a resumption of the downtrend. This week begins with the EUR/USD down seven weeks from its last swing top at 1.1816. This puts it in the window of time for a closing price reversal bottom, but it’s going to take some positive news out of the Euro Zone or some negative news from the U.S. to fuel a turnaround.

The EUR/USD also begins the week inside a major retracement zone bounded by 1.1447 to 1.1185.

Weekly Technical Forecast

Based on last week’s close at 1.1335, the direction of the EUR/USD this week is likely to be determined by trader reaction to the main bottom at 1.1301.

Holding above 1.1301 will indicate the presence of buyers. They will be coming in to defend the swing bottom. If they can create enough upside momentum then we could see a retest of the main 50% level at 1.1447. Overtaking this level will indicate the buying is getting stronger with a downtrending Gann angle at 1.1536 the next likely upside target.

A sustained move through 1.1301 will signal the presence of sellers. The first downside target is a downtrending Gann angle at 1.1256. Crossing to the weak side of this angle will indicate the selling is getting stronger.

The downtrending Gann angle is moving at a rate of .0080 per week from the 1.1816 main top. If the EUR/USD continues to follow this angle lower, then it should reach the main Fibonacci level at 1.1185 during the week-ending November 23.