EUR/USD Forex Technical Analysis – Trader Reaction to 1.0366 Sets Tone into Close

The Euro is trading lower, but up off its lows on Thursday as U.S. Treasury yields rose and investors bet on a relatively hawkish Federal Reserve.

The common currency had been rising in recent weeks as inflation data and Federal Reserve commentary implied that it could soon slow the pace of its interest rate hikes. Expectations of aggressive rate hikes by the European Central Bank (ECB) also give the Euro a boost.

At 19:00 GMT, the EUR/USD is trading 1.0365, down 0.0029 or -0.28%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $95.65, down $0.27 or -0.28%.

U.S. Treasury yields rose sharply following comments from key Fed speakers on inflation and the pace of further interest rate hikes from the central bank, St. Louis Federal Reserve President James Bullard said Thursday that interest rate hikes from the central bank have had “only limited effects” on observed inflation.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.0480 will signal a resumption of the uptrend. A move through .9730 will change the main trend to down.

The minor trend is also up. A trade through .9936 will change the minor trend to down. This will shift momentum to the downside.

The main resistance zone is 1.0366 to 1.0560. It stopped the buying at 1.0480 on Tuesday.

The minor range is .9936 to 1.0480. Its pivot at 1.0208 is the nearest support. This is followed by a short-term 50% level at 1.0076.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at 1.0366 is likely to determine the direction of the EUR/USD into the close on Thursday.

Bearish Scenario

A sustained move under 1.0366 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor pivot at 1.0208.

Bullish Scenario

A sustained move over 1.0366 will signal the presence of buyers. If this generates enough upside momentum then look for the rally to possible lead to a retest of 1.0480.