The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to 1.1864.
The Euro is trading flat against the U.S. Dollar for a second session on Tuesday as traders continue to position themselves ahead of Friday’s important U.S. Non-Farm Payrolls report. With Federal Reserve members and Chairman Jerome Powell clearly emphasizing the labor market in last week’s monetary policy statement and post-meeting press conference, the payrolls report could set the tone in the Forex market for the next few months.
At 11:01 GMT, the EUR/USD is trading 1.1887, up 0.0015 or +0.13%.
Some traders think the Fed will make an announcement about tapering its bond purchases at the central bankers’ summit at Jackson Hole, Wyoming in mid-August. Others think the Fed will wait until its next meeting on September 21-22 with some Fed members saying they want to see September’s job market numbers before making a decision.
In other news, the Euro showed little reaction to a Purchasing Managers Index (PMI) reading of July manufacturing at 62.8, a touch above the “flash” number of 62.6.
The main trend is up according to the daily swing chart. A trade through 1.1909 will signal a resumption of the uptrend. A move through 1.1752 will change the main trend to down.
Momentum will shift to the downside on a trade through 1.1851. This move will confirm Friday’s potentially bearish closing price reversal top.
The short-term range is 1.1975 to 1.1752. The EUR/USD is currently testing its retracement zone at 1.1864 to 1.1890.
The minor range is 1.1752 to 1.1909. Its retracement zone at 1.1830 to 1.1812 is a potential downside target and support area.
The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to 1.1864.
A sustained move over 1.1864 will indicate the presence of buyers. The first upside target is 1.1890, followed by 1.1909. The latter is a potential trigger point for an acceleration to the upside.
A sustained move under 1.1864 will signal the presence of sellers. This could trigger a break into the minor retracement zone at 1.1830 to 1.1812. Since the main trend is up, buyers are likely to come in on a test of this area.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.