James Hyerczyk
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The Euro is trading higher late Thursday as the U.S. Dollar continued to weaken after dovish signals from the U.S. Federal Reserve boosted the reflation trade in currency markets.

Easy financial conditions, the promise of fiscal stimulus and accelerating COVID-19 vaccine rollouts have driven money into what’s known as the reflation trade, referring to bets on an upswing in economic activity and prices.

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At 17:36 GMT, the EUR/USD is trading 1.2229, up 0.0059 or +0.48%.

Fed Chair Jerome Powell reiterated on Wednesday that the central bank will not tighten its policy until the economy improves.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up earlier today when buyers took out the previous main top at 1.2190. A trade through 1.1952 will change the main trend to down.

The minor trend is also up. A trade through 1.2109 will change the minor trend to down. This will shift momentum to the downside.

The short-term range is 1.2349 to 1.1952. The EUR/USD is currently trading on the strong side of its retracement zone at 1.2197 to 1.2151. This zone is new support.


Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close is likely to be determined by trader reaction to 1.2197.

Bullish Scenario

A sustained move over 1.2197 will indicate the presence of buyers. The daily chart indicates there is plenty of room to the upside with 1.2349 and 1.2413 the next likely upside targets. Depending on the volume, we could see an acceleration to the upside or a slow grind.

Bearish Scenario

A sustained move under 1.2197 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at 1.2151. A move through this level will indicate the selling is getting stronger with the next targets the minor bottom at 1.2109, followed by the main 50% level at 1.2074.

For a look at all of today’s economic events, check out our economic calendar.

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