Based on the early price action, the direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to the resistance cluster at 1.1374.
The Euro is trading slightly better shortly before the U.S. opening and testimony from U.S. Federal Reserve chairman Jerome Powell. The Fed chief could trigger a volatile reaction depending on how his remarks are interpreted. If Powell continues to come across as dovish then this should bolster demand for the Euro. A hawkish Powell will likely weaken the single-currency.
At 11:45 GMT, the EUR/USD is trading 1.1363, up 0.0006 or +0.05%.
The main trend is up according to the daily swing chart. A trade through 1.1371 will signal a resumption of the uptrend. A move through 1.1317 will change the main trend to down.
The main range is 1.1514 to 1.1234. Its retracement zone at 1.1374 to 1.1407 is the primary upside target. This zone is controlling the near-term direction of the EUR/USD.
The short-term range is 1.1371 to 1.1234. If the trend changes to down then its retracement zone at 1.1303 to 1.1286 will become the primary downside target.
Based on the early price action, the direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to the resistance cluster at 1.1374.
A sustained move over 1.1374 will indicate the presence of buyers. This could trigger an acceleration to the upside with 1.1407 the next major upside target. This is followed by a downtrending Gann angle at 1.1424.
A sustained move under 1.1374 will signal the presence of sellers. The first target is a downtrending Gann angle at 1.1424. Crossing to the weak side of this angle will put the EUR/USD in a bearish position with the next downside targets coming in at 1.1317, 1.1304 and 1.1303.
Look for Powell to reiterate the Fed’s commitment to a go-slow approach to future rate hikes, an acknowledgement of the challenges balance sheet reduction poses, and the economic outlook in view of renewed chatter from Fed policymakers about the weak pace of inflation amid a global economic slowdown.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.