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EUR/USD Forex Technical Analysis – Will Powell Calm Investors, or Increase Recession Worries?

By:
James Hyerczyk
Updated: Jun 24, 2022, 07:40 UTC

Powell could make or break the EUR/USD this week, depending on what he signals to investors about inflation or a potential recession.

EUR/USD

In this article:

The Euro is down on Wednesday on renewed worries that aggressive rate hikes from the major central banks to combat inflation run the risk of slowing down the global economy too much or even pushing it into recession.

The downswing in prices comes less than a day after a high ranking European Central Bank (ECB) official drove the single-currency higher after he said policymakers could raise its benchmark by 50 basis points in September.

At 12:12 GMT, the EUR/USD is trading 1.0521, down 0.0014 or -0.13%. On Tuesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $97.40, up $0.31 or +0.32%.

After the initial weakness, prices are now consolidating ahead of U.S. Federal Reserve Chair Jerome Powell’s two-day testimony to the Senate Banking Committee on Wednesday and the House Financial Services Committee on Thursday.

Powell could make or break the markets this week, depending on what he signals to investors about the direction of interest rates, whether inflation can be tamed or if the economy is headed into a recession.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher.

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

The minor range is 1.0359 to 1.0601. The EUR/USD is currently trading on the strong side of its pivot at 1.0480, making it potential support.

The short-term range is 1.0774 to 1.0359. Its retracement zone at 1.0586 to 1.0630 is resistance. It stopped the buying at 1.0601 on June 16.

Daily Swing Chart Technical Forecast

Trader reaction to 1.0480 is likely to determine the direction of the EUR/USD into the close on Wednesday.

Bullish Scenario

A sustained move over 1.0480 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the short-term 50% level at 1.0586, followed by a high at 1.0601 and a short-term Fibonacci level at 1.0630.

Taking out 1.0630 could trigger an acceleration to the upside with the resistance cluster at 1.0770 – 1.0774 the next key upside target.

Bearish Scenario

A sustained move under 1.0480 will signal the presence of sellers. This could trigger a sharp break into the series of main bottoms at 1.0359, 1.0354 and 1.0339.

Side Notes

If Powell comes off as hawkish then look for the Euro to plunge through 1.0480.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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