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James Hyerczyk

The Euro is trading higher against the U.S. Dollar on Thursday amid a jump in Euro Zone economic sentiment. Confidence among manufacturers rose while unemployment hit its lowest level in more than a decade. Gains were limited after data showed the U.S. economy grew 2.1% in the fourth quarter. However, none of this will really matter much at the end of the day if China’s fast-spreading coronavirus triggers an economic downturn.

At 15:16 GMT, the EUR/USD is trading 1.1028, up 0.0020 or +0.17%.

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A European Commission’s monthly survey said economic sentiment in the 19 countries sharing the Euro rose to 102.8 points in January from 101.3 in December, well above the average forecast of 101.8 points in a Reuters poll of economists.

Unemployment data supported the upbeat view, as the jobless rate dropped in the Euro Zone to 7.4% in December, its lowest level since May 2008, when the global financial crisis began to hit the bloc, data from the EU statistics agency Eurostat showed.




Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0992 will reaffirm the downtrend. The main trend will change to up on a trade through 1.1173. This is unlikely, however, but there is room for a normal 50% to 61.8% retracement.

The main range is 1.0879 to 1.1239. Its retracement zone at 1.1017 to 1.1059 is controlling the near-term direction of the EUR/USD.

The short-term range is 1.1173 to 1.0992. Its retracement zone at 1.1083 to 1.1104 is the next upside target. Since the main trend is down, sellers are likely to show up on a test of this zone.


Daily Technical Forecast

Based on the early price action and the current price at 1.1028, the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to the main Fibonacci level at 1.1017.

Bullish Scenario

A sustained move over 1.1017 will indicate the presence of buyers. If this move generates enough upside momentum then look for the buying to possibly extend into the main 50% level at 1.1059, followed closely by the downtrending Gann angle at 1.1073.

Bearish Scenario

A sustained move under 1.1017 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the main bottom at 1.0992, followed by the long-term uptrending Gann angle at 1.0985. This angle is a potential trigger point for an acceleration to the downside.

Crossing to the weak side of the downtrending Gann angle at 1.0973 will also indicate the selling pressure is getting stronger.

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