Based on the early price action and the current price at 1.1132, the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the pivot at 1.1144.
The Euro is edging lower against the U.S. Dollar on Friday shortly before the U.S. opening and the release of the U.S. Advance GDP report at 12:30 GMT. The report is expected to show the economy grew 1.8%, down from the previously reported 3.1%. A stronger number will be bullish for the U.S. Dollar because it will reduce the chances of an aggressive Federal Reserve rate cut on July 31. This would drive up U.S. Treasury yields, making the U.S. Dollar a more attractive investment.
At 10:38 GMT, the EUR/USD is trading 1.1132, down 0.0014 or -0.13%.
The main trend is down according to the daily swing chart. However, yesterday’s potentially bullish closing price reversal bottom seems to have neutralized the selling at the moment.
A trade through 1.1101 will negate the closing price reversal bottom and signal a resumption of the downtrend, while a trade through 1.1188 will confirm the closing price reversal bottom. This move will shift momentum to the upside and likely lead to a 2 to 3 day counter-trend rally.
The short-term range is 1.1101 to 1.1188. Its 50% level or pivot at 1.1144 is likely to control the short-term direction of the Forex pair today.
On the upside, the long-term Fibonacci level at 1.1185 is resistance.
Based on the early price action and the current price at 1.1132, the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the pivot at 1.1144.
A sustained move over 1.1144 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the resistance cluster at 1.1182 to 1.1185. Since the main trend is down, look for sellers on the first test of this area.
A sustained move under 1.1144 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into yesterday’s low at 1.1101. Look for an acceleration to the downside if this level is taken out with conviction. Given the importance of this level, watch for a closing price reversal bottom if selling volume doesn’t increase on the move.
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.