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James Hyerczyk

The Euro is trading slightly lower against the U.S. Dollar on Thursday, while posting a relatively wide range. The price action suggests traders are content with holding the single-currency in a trading range ahead of the European Central Bank meeting on July 25 and the Federal Reserve’s policy meeting on July 30-31.

Traders have priced in a 100% chance of a 25-basis point rate cut by the Fed, and about a 34% chance of a more aggressive 50-basis point rate cut. Euro traders expect the ECB to introduce more stimulus while preparing traders for a potential rate cut perhaps in September.

At 11:43 GMT, the EUR/USD is trading 1.1225, unchanged.


Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on June 25. Furthermore, the secondary lower top at 1.1286 is also a sign of increasing selling pressure.

The main trend changes to down on a trade through 1.1193. This is followed by another main bottom at 1.1181. This level is a potential trigger point for an acceleration to the downside with target bottoms at 1.1116 and 1.1107.

A trade through 1.1286 will signal a resumption of the uptrend and shift momentum to the upside.

The short-term range is 1.1193 to 1.1286. Its 50% level or pivot at 1.1240 is controlling the direction of the EUR/USD today.

On the downside, the major support is the long-term Fibonacci level at 1.1185. On the upside, the resistance is the main retracement zone at 1.1278 to 1.1318.


Daily Technical Forecast

Based on the early price action and the current price at 1.1225, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the uptrending Gann angle at 1.1208.

Bullish Scenario

A sustained move over 1.1208 will indicate the presence of buyers. This could lead to a labored rally with potential targets an uptrending Gann angle at 1.1228, the daily pivot at 1.1240 and the downtrending Gann angle at 1.1243.

Overtaking 1.1243 could trigger an acceleration to the upside with the next targets 1.1263 and 1.1278.

Bearish Scenario

A sustained move under 1.1208 will signal the presence of sellers. This could drive the EUR/USD through the minor bottom at 1.1200, the main bottom at 1.1193, the major Fibonacci level at 1.1185 and another main bottom at 1.1181. The latter is the trigger point for an acceleration to the downside.

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