EUR/USD Forex Technical Analysis – Strengthens Over 1.2214, Weakens Under 1.2179

The Euro is hovering near a 2-1/2 year high early Tuesday as the U.S. Dollar remains under pressure after U.S. lawmakers pushed forward with a coronavirus relief package.

At 06:40 GMT, the EUR/USD is trading 1.2240, up 0.0026 or +0.21%.

Reuters is reporting that the U.S. House of Representatives voted Monday to increase stimulus payments to qualified Americans to $2,000 from $600, sending the measure to the Republican-led Senate for a vote. The bill is expected to die there.

If by chance, the Senate approves the new package, the dollar would likely get crushed by the news, while the Euro would soar. Because of the extremely low volume, any rally would likely be exaggerated.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2298 would signal a resumption of the uptrend. The main trend will change to down on a move through 1.2059.

The minor trend is also up. A trade through 1.2130 will change the minor trend to down. This would shift momentum to the downside.

The first minor range is 1.2130 to 1.2298. Its 50% level at 1.2214 is support.

The second minor range is 1.2059 to 1.2298. Its 50% support comes in at 1.2179.

Daily Swing Chart Technical Forecast

The early price action indicates the direction of the EUR/USD on Tuesday will be determined by trader reaction to 1.2214.

Bullish Scenario

A sustained move over 1.2214 will indicate the presence of buyers. If this move generates enough upside momentum then look for a retest of last week’s high at 1.2298. This will be highly unlikely due to the low volume.

If the Senate surprisingly passes the $2000 stimulus bill then the April 17, 2018 top at 1.2413 would become the minimum upside target.

Bearish Scenario

A sustained move under 1.2214 will signal the presence of sellers. This could trigger a quick break into 1.2179. If volume were average, this level would be the trigger point for an acceleration to the downside.

Side Notes

Essentially, we’re looking for an upside bias to develop on a sustained move over 1.2214, and for a downside bias to begin on a sustained move under 1.2179.

For a look at all of today’s economic events, check out our economic calendar.