EUR/USD Forex Technical Analysis – Underpinned as Financial Futures Traders Cap Fed Hike Expectations

The Euro is edging higher against the U.S. Dollar on Monday as the European Central Bank’s annual forum in Sintra got underway with ECB President Christine Lagarde and Federal Reserve Chair Jerome Powell both attending the meeting. Traders will be keenly watching for any signs of future policy moves.

At 11:54 GMT, the EUR/USD is trading 1.0569, up 0.0012 or +0.12%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $97.59, up $0.19 or +0.20%.

Helping to boost the single currency is a weaker greenback. The U.S. Dollar is struggling as traders reassessed the prospects of aggressive rate hikes.

Futures pricing shows traders now anticipating the U.S. Federal Reserve’s benchmark funds rate stabilizing around 3.5% from March next year, a pullback from pricing in rates zooming to around 4% in 2023.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on June 15.

A trade through 1.0774 will change the main trend to up. A move through 1.0359 will negate the reversal bottom and signal a resumption of the downtrend.

The short-term range is 1.0774 to 1.0359. The EUR/USD is currently testing its retracement zone at 1.0567 to 1.0616. This zone stopped the buying at 1.0606 on June 22.

The minor range is 1.0359 to 1.0606. Its 50% level or pivot at 1.0482 is support.

If there is a breakout to the upside then 1.0770 will become the primary upside target.

Daily Swing Chart Technical Forecast

Trader reaction to 1.0567 is likely to determine the direction of the EUR/USD on Monday.

Bullish Scenario

A sustained move over 1.0567 will indicate the presence of buyers. The first upside target is the minor top at 1.0606, followed by the short-term Fibonacci level at 1.0616. If this move generates enough momentum then look for an acceleration to the upside with the price cluster at 1.0770 – 1.0774 the next upside target.

Bearish Scenario

A sustained move under 1.0567 will signal the presence of sellers. If this creates enough downside momentum then look for the selling pressure to extend into the short-term pivot at 1.0482.