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James Hyerczyk

The Euro is trading flat against the U.S. Dollar on Thursday after the U.S. Federal Reserve signaled it plans years of extraordinary support to counter the economic fallout from the coronavirus pandemic and markets digested a deluge of bond issuance from lower-rated Euro Zone states.

Sharply lower U.S. equity markets are fueling heightened volatility in the financial markets so be prepared for a two-sided trade.

All 17 current Fed policymakers see the federal funds rate – unchanged on Wednesday – remaining near zero through next year, and 15 of them see no change through 2022. That contrasts with the 2008/09 global financial crisis, when some policymakers raised a cautionary flag about the need for higher interest rates to guard against inflation.

“We are not even thinking about thinking about raising rates,” Fed Chair Jerome Powell said.

At 14:05 GMT, the EUR/USD is trading 1.1375, unchanged. This is up from a low of 1.1325.


Weekly Unemployment Claims Better Than Expected

The pace of unemployment claims declined again last week as the U.S. jobs market continued its plodding recovery from the coronavirus pandemic, Labor Department data showed Thursday.

Initial claims totaled 1.54 million, compared to the 1.6 million expected from economists surveyed by Dow Jones and a plunge of 355,000 from the previous week’s total just shy of 1.9 million. The four-week moving average, which smooths volatility in the numbers fell by 286,250 to 2 million.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1422 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.1240.

The minor range is 1.1240 to 1.1422. Its 50% level or pivot at 1.1331 is support.

The main range is 1.1496 to 1.0636. Its retracement zone at 1.1167 to 1.1066 is the major support zone. This zone is also controlling the longer-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1375, the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to the pivot at 1.1331.

Bullish Scenario

A sustained move over 1.1331 will indicate the presence of buyers. Turning higher for the session will indicate the buying is getting stronger with 1.1422 the next likely upside target.

If a breakout over 1.1422 creates enough upside momentum then we could see an acceleration into a pair of main tops at 1.1486 to 1.1514.

Bearish Scenario

A sustained move under 1.1331 will signal the presence of sellers. Taking out 1.1322 will indicate the selling is getting stronger. This could trigger an acceleration into the main bottom at 1.1240.

The main trend will change to down if 1.1240 fails as support. This could trigger a further break into the main Fibonacci level at 1.1167.

Side Notes

Due to the early volatility, some may want to treat yesterday’s close at 1.1375 as the intraday pivot. The 50% level at 1.1331 may be more of a daily chart pivot.

For a look at all of today’s economic events, check out our economic calendar.
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