EUR/USD Forex Technical Analysis – Weakens Under 1.2010, Strengthens Over 1.2074

The Euro is trading sharply lower against the U.S. Dollar late Wednesday as rising Treasury yields and upbeat economic data helped the greenback gain ground against the single-currency.

U.S. retail sales rebounded sharply in January after households received additional pandemic relief money from the government, suggesting a pick-up in economic activity after being restrained by a fresh wave of COVID-10 infections late last year.

Retail sales surged by a seasonally adjusted 5.3% last month after decreasing 1.0% in December. Economists polled by Reuters had forecast sales increasing 1.1% in January. Retail sales increased 7.4% from a year ago.

In separate reports on Wednesday, the Federal Reserve said manufacturing production rose 1.0% last month after gaining 0.9% in December. The ninth straight monthly advance in factory production was despite a shortage of semiconductors weighing on the output of motor vehicles.

Additionally, firming economic activity is starting to boost inflation. In a third report, the Labor Department said its producer price index for final demand jumped 1.3% last month, the biggest gain since December 2009. That followed a 0.3% rise in December.

At 19:39 GMT, the EUR/USD is trading 1.2042, down 0.0064 or -0.53%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1952 will signal a resumption of the downtrend. The main trend will change to up on a move through 1.2190.

The minor trend is down. The minor trend turned down earlier today when sellers took out 1.2082. A trade through 1.2170 change the minor trend to up and shift momentum to the upside.

The short-term range is 1.2349 to 1.1952. Its retracement zone at 1.2151 to 1.2197 is resistance. This zone stopped the buying on Tuesday at 1.2170.

The main range is 1.1800 to 1.2349. The EUR/USD is currently testing its retracement zone at 1.2074 to 1.2010. Trader reaction to this zone will determine the near-term direction of the EUR/USD.

Daily Swing Chart Technical Forecast

The next important move in the EUR/USD will be determined by trader reaction to the 50% level at 1.2074 and the 61.8% level at 1.2010.

Bullish Scenario

A sustained move over 1.2074 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible retest of 1.2151 to 1.2197 over the near-term.

Bearish Scenario

A sustained move under 1.2010 will signal the presence of sellers. This could trigger a break into the main bottom at 1.1952. This level is a potential trigger point for an acceleration to the downside with the November 23 main bottom at 1.1800 the next likely downside target.