EUR/USD Forex Technical Analysis – Strengthens Over 1.1587, Weakens Under 1.1447

The Euro rose against the U.S. Dollar last week with most of the gains coming early to mid-week after the Fed released dovish minutes from its December monetary policy meeting. The minutes showed that Fed policymakers were willing to take a pause in its tightening cycle due to heightened market volatility and the threat of a global economic slowdown. However, the Euro gave up some of its upside momentum late in the week due to concerns over the Euro Zone economy.

Last week, the EUR/USD settled at 1.1470, up 0.0072 or +0.63%. However, this was after it hit its highest level since the week-ending October 19.

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. However, momentum is trending higher. The main trend will change to up on a trade through 1.1816. A move through 1.1216 will signal a resumption of the downtrend.

The minor trend is up. This is helping to generate the upside momentum. A trade through 1.1270 will change the minor trend to down.

The long-term trading range is 1.0339 to 1.2555. Its retracement zone is 1.1447 to 1.1185. After straddling this zone for 14 weeks, the EUR/USD finally broke out to the strong side of this zone last week. This is contributing to the upside momentum. The retracement zone is new support.

The main range is 1.1816 to 1.1216. Its retracement zone at 1.1516 to 1.1587 was tested last week and stopped the rally at 1.1570. This zone is resistance.

Weekly Swing Chart Technical Forecast

Based on last week’s price action and the close at 1.1470, the direction of the EUR/USD this week is likely to be determined by trader reaction to the long-term 50% level at 1.1447.

Bullish Scenario

A sustained move over 1.1447 will indicate the presence of buyers. If this can create enough upside momentum then look for a labored rally with targets coming in at 1.1516 and 1.1587.

The trigger point for an acceleration to the upside is the Fibonacci level at 1.1587. Crossing to the strong side of this level will put the EUR/USD in a bullish position with only the minor top at 1.1622 in the way.

Bearish Scenario

A sustained move under 1.1447 will signal the presence of sellers. If this occurs then look for more sideways trading over the near-term.