EUR/USD Forex Technical Analysis – Range Bound Trade Suggests Investor Indecision, Impending Volatility

If you look closely at the weekly Euro chart, you’ll notice it hasn’t posted a prolonged move in terms of price and time since the week-ending February 16. Essentially, the price action since then has been just a series of minor tops and minor bottoms. This indicates investor indecision and impending volatility.

Last week, the EUR/USD settled at 1.2286, down 0.0041 or -0.24%.

Gains are currently being capped by rising U.S. interest rates which are helping to widen the spread between U.S. Government Bonds and German Bunds, making the U.S. Dollar a more attractive investment. Additionally, recent Euro Zone data suggests the economy may have topped out.

This week’s European Central Bank’s monetary policy decision and subsequent press conference by ECB President Mario Draghi could help the Euro break out of its two-month trading range.

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. A trade through 1.2555 will signal a resumption of the uptrend. The EUR/USD is in no danger of changing the main trend to down, but there is plenty of room to the downside for a correction. A trade through 1.1717 will change the main trend to down.

The EUR/USD is currently trading inside a major, long-term retracement zone, bounded by 1.2166 and 1.2597. Trader reaction to this zone could determine the longer-term direction of the Forex pair.

On the upside, additional resistance is the high at 1.2555 and the December 16, 2014 main top at 1.2569.

The short-term range is 1.1717 to 1.2555. Its retracement zone at 1.2136 to 1.2037 is the primary downside target. Since the main trend is up, buyers could show up on a test of this zone.

Additional support is the 2017 close at 1.2006.

Weekly Swing Chart Technical Forecast

This week begins with the minor trend down. A trade through 1.2413 will change the minor trend to up. This could trigger a rally into 1.2476, followed by 1.2555 then 1.2569 and 1.2597.

A trade through 1.2214 will reaffirm the minor downtrend. This could lead to a test of 1.2166, 1.2153 and 1.2136. The latter is the trigger point for a possible acceleration into 1.2037, followed by 1.20006.