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James Hyerczyk

The Euro is trading lower but inside Friday’s range on below average volume. The price action suggests investor indecision and impending volatility. The single-currency is being pressured by trader reaction to Friday’s solid U.S. jobs report and upbeat factory activity data.

The news is helping to drive up U.S. Treasury yields as investors cut expectations on a rate cut later this year. Rising rates are helping to make the U.S. Dollar a more attractive investment.

At 11:02 GMT, the EUR/USD is trading 1.1449, down 0.0007 or -0.06%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. The momentum could shift if sellers confirm Thursday’s closing price reversal top with a trade through 1.1435.

A trade through 1.1435 will negate the closing price reversal top and signal the buying is getting stronger. The main trend will change to up on a trade through 1.1570.

The minor trend is up. This is helping to generate the upside momentum. A trade through 1.1407 will change the minor trend to down. This will also signal a shift in momentum to the downside.

The main range is 1.1570 to 1.1289. The market is currently trading inside its retracement zone at 1.1429 to 1.1463. This zone is controlling the near-term direction of the Euro.

On the upside, the major retracement zone resistance is 1.1516 to 1.1587. The lower or 50% level at 1.1516 stopped the rally last week.

The short-term range is 1.1289 to 1.1544. Its retracement zone at 1.1417 to 1.1386 is the next downside target. Watch for a technical bounce on a test of this zone if aggressive counter-trend buyers come in to provide support.


Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the Fibonacci level at 1.1463.

Bullish Scenario

Taking out and sustaining a rally over 1.1463 will indicate the presence of buyers. This could create the upside momentum needed to challenge the downtrending Gann angle at 1.1485. Since the main trend is down, sellers could come in on a test of this angle. Overcoming it, however, could trigger an acceleration to the upside with the next target area 1.1514 to 1.1516.

Bearish Scenario

The inability to overcome or sustain a rally over 1.1463 will signal the presence of sellers. The first downside target is a support cluster at 1.1429. Watch for aggressive counter-trend buyers on the first test of this support cluster.

If 1.1429 fails as support then look for the selling to extend into 1.1417. This price has to hold or we are likely to see further weakness into 1.1407 then 1.1386.

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