James Hyerczyk
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The Euro is trading sharply lower against the U.S. Dollar in a volatile session after data showed that Euro Zone private sector growth slowed in December to the lowest level since February 2016. According to IHS Markit, final Euro Zone Manufacturing PMI fell to 51.4 from 51.8 in November. The number came in line with the forecast.

At 1320 GMT, the EUR/USD is trading 1.1399, down 0.0064 or -0.56%.

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Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower following Tuesday’s dramatic closing price reversal top.

A trade through 1.1586 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.1343.

The minor trend is down. It turned down earlier today when sellers took out 1.1421. This move also shifted momentum to the downside. Additionally, the confirmation of the closing price reversal top also added to the shift in momentum.

The major long-term retracement zone is 1.1447 to 1.1185. The market is trading back inside this zone. Prior to Tuesday’s breakout to the upside, the Euro spent nearly two months inside this zone.

The main range is 1.1216 to 1.1586. The market is currently testing its retracement zone at 1.1401 to 1.1357. Since the main trend is up, buyers could return on a test of this zone. If 1.1357 fails then look for an acceleration to the downside.


Daily Swing Chart Technical Forecast

Based on the current price at 1.1399, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the 50% level at 1.1401.

Bullish Scenario

A sustained move over 1.1401 will indicate the return of buyers. If this move can generate enough upside momentum then look for a potential rally into the major 50% level at 1.1447.

Bearish Scenario

A sustained move under 1.1401 will indicate the selling is getting stronger. This could trigger an acceleration to the downside with the next target the Fibonacci level at 1.1357. This is followed closely by the main bottom at 1.1343.

Taking out 1.1343 will change the main trend to down. This could also trigger an acceleration to the downside with the next major target coming in at 1.1270.

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