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James Hyerczyk

The Euro is inching higher against the U.S. Dollar, one day after it posted a potentially bullish closing price reversal bottom on Tuesday. Yesterday, the single-currency was little moved by the resignation of Italy’s Prime Minster Giuseppe Conte.

Traders will be paying attention to today’s U.S. Federal Reserve monetary policy meeting minutes, due to be released at 18:00 GMT, however, the focus will shift quickly to central banker speeches at Jackson Hole, Wyoming, beginning with Fed Chief Jerome Powell on Friday.

At 11:10 GMT, the EUR/USD is trading 1.1104, up 0.0003 or +0.03%.

Powell is expected to address the recent Treasury note yield curve inversion and stock market volatility, but investors are hoping he comes across as aggressive in dealing with a potential global recession. EUR/USD traders are dealing with two potential events concerning monetary policy and fiscal policy. Changes to monetary policy could include a rate cut and quantitative easing, which tend to be bearish for a currency. Talk of more fiscal spending in Germany, however, could underpin the Euro.


Daily Technical Analysis

The main trend is down according to the daily swing chart, however, yesterday’s closing price reversal bottom indicates momentum may be getting ready to shift to the upside.

A trade through 1.1066 will negate the closing price reversal bottom, while a move through 1.1107 will confirm the chart pattern. This could lead to a two to three day counter-trend rally.

The minor trend is also down. A trade through 1.1114 will change the minor trend to up. This move will confirm the shift in momentum to up.

The short-term range is 1.1027 to 1.1250. Its retracement zone at 1.1112 to 1.1139 is providing resistance. Overtaking this area will indicate the buying is getting stronger.


Daily Technical Forecast

Based on the early price action and the current price at 1.1104, the direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at 1.1097.

Bullish Scenario

A sustained move over 1.1097 will indicate the presence of buyers. This could create the momentum needed to take out yesterday’s high at 1.1107, the short-term Fibonacci level at 1.1112 and the minor top at 1.1114. This could trigger an acceleration to the upside with the resistance cluster at 1.1139 to 1.1140 the next target.

Overtaking 1.1140 will indicate the buying is getting stronger. This could lead to a surge into another downtrending Gann angle at 1.1167.

Bearish Scenario

A sustained move under 1.1097 will signal the presence of sellers. If this move generates enough downside momentum then look for a potential break into 1.1066, followed by the uptrending Gann angle at 1.1062. This is the last potential support before the 1.1027 main bottom.

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