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James Hyerczyk

The Euro is trading flat against the U.S. Dollar on Friday as investors await a slew of U.S. economic reports including Retail Sales and Core Retail Sales at 12:30 GMT. Retail Sales are expected to show a 2% increase, well below the previously reported 7.5%. Core Retail Sales are expected to come in 1.3% higher versus the previously reported 7.3%.

At 10:25 GMT, the EUR/USD is trading 1.1806, down 0.0009 or -0.08%.

Other reports include Capacity Utilization, Industrial Production and Preliminary University of Michigan Consumer Sentiment.

Earlier today, a report showed that the Euro Zone’s trade surplus with the rest of the world jumped in June to 21.2 billion Euros ($25 billion) as the bloc’s drop in imports of goods outpaced the fall of exports amid a global decline in the trade due to the COVID-19 pandemic.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1916 will signal a resumption of the uptrend. The main trend will change to down when sellers take out the nearest swing bottom at 1.1711.

The minor range is 1.1916 to 1.1711. Its retracement zone at 1.1813 to 1.1838 is potential resistance.

The short-term range is 1.1371 to 1.1916. If the main trend changes to down then its retracement zone at 1.1644 to 1.1579 will become the next downside target zone.


Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the minor 50% level at 1.1813.

Bullish Scenario

A sustained move over 1.1813 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the minor Fibonacci level at 1.1838, followed by yesterday’s high at 1.1864.

Taking out 1.1864 will indicate the buying is getting stronger. This could trigger an acceleration into the main top at 1.1916.

Bearish Scenario

A sustained move under 1.1813 will signal the presence of sellers. If this creates enough downside momentum then look for an eventual retest of the main bottom at 1.1711. Taking out this bottom will change the main trend to down with the next target the short-term retracement zone at 1.1644 to 1.1579.

Side Notes

The chart pattern suggests that aggressive counter-trend sellers are trying to form a potentially bearish secondary lower top. At the same time, the U.S. Dollar Index is trying to form a potentially bullish secondary higher bottom. This is understandable since the Euro represents about 57% of the index.

Another way to look at the retracement zone at 1.1813 to 1.1838 suggests the uptrend could resume on a sustained move over 1.1838, and selling pressure could increase under 1.1813.

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