EUR/USD Forex Technical Analysis – Struggling at 1.0645 – 1.0714 Retracement Zone Following Trend Change

The Euro is trading higher on Monday as investors sold the U.S. Dollar on hopes that loosening COVID-driven restrictions in China could help stimulate global growth.

Sentiment around China is starting to shift to positive. Shanghai is edging out of lockdown and an unexpectedly big rate cut by the Peoples’ Bank of China last week sent a strong signal that officials are going to provide support.

At 12:18 GMT, the EUR/USD is trading 1.0656, up 0.0097 or +0.92%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $97.71, down $0.37 or -0.38%.

Providing some optimism for the Euro on Monday was a survey from the Ifo Institute showing that German business morale unexpectedly rose in May, indicating that Europe’s largest economy was proving resilient in the face of high inflation, supply chain problems and the war in Ukraine.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up earlier in the session when buyers took out the previous main top at 1.0642. A trade through 1.0354 will change the main trend to down.

The minor range is 1.0354 to 1.0688. Its pivot at 1.0521 is the nearest support.

The short-term range is 1.0936 to 1.0354. The EUR/USD is currently testing its retracement zone at 1.0645 to 1.0714.

The main range is 1.1185 to 1.0354. Its retracement zone at 1.0770 to 1.0868 is the primary objective of this rally.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Monday is likely to be determined by trader reaction to 1.0645.

Bullish Scenario

A sustained move over 1.0645 will indicate the presence of buyers. This could lead to a labored rally with a short-term Fibonacci level at 1.0714 the next target. This is followed by the main 50% level at 1.0770 and the main Fibonacci level at 1.0868.

Bearish Scenario

A sustained move under 1.0645 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the pivot at 1.0521.