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James Hyerczyk

The Euro is trading lower against the U.S. Dollar on Wednesday after the release of unimpressive economic data from Germany and the Euro Zone. The news highlights the damage to the Euro Zone economy from the U.S.-China trade war. European industrial production was also weaker than expected.

Industrial production from China was also weak, raising concerns over a worsening global economy. In the U.S., the 2 and 10 year Treasury yields inverted, signaling a recession in the future.

At 14:14 GMT, the EUR/USD is trading 1.1143, down 0.0028 or -0.25%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A new top has formed at 1.1250. A trade through this level will change the main trend to up. A move through 1.1027 will signal a resumption of the downtrend.

The main range is 1.1413 to 1.1027. Its retracement zone at 1.1220 to 1.1265 is resistance. This zone stopped the rally on August 6 at 1.1250.

The short-term range is 1.1027 to 1.1250. Its retracement zone at 1.1139 to 1.1112 is the next downside target zone. Aggressive counter-trend buyers could come in on a test of this zone. They may try to form a secondary higher bottom.


Daily Technical Forecast

Based on the early price action and the current price at 1.1143, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the short-term 50% level at 1.1139.

Bearish Scenario

A sustained move under 1.1139 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the uptrending Gann angle at 1.1117, followed by the short-term Fibonacci level at 1.1112. Watch for counter-trend buyers on a test of these levels.

Look for an acceleration to the downside if 1.1112 fails as support. This could trigger a break into an uptrending Gann angle at 1.1072.

Bullish Scenario

Holding the short-term 50% level at 1.1139 will signal the presence of buyers. If this fuels a turnaround then look for a potential rally into 1.1185 and a downtrending Gann angle at 1.1192. This is a potential trigger point for an acceleration into 1.1220.

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