James Hyerczyk
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The Euro is trading slightly higher on Monday and inside the previous range. The price action suggests investor indecision and impending volatility. Buyers are trying to recover from Friday’s steep break which was caused by weaker-than-expected German manufacturing data.

Today’s slight recovery indicates that the previous session’s sell-off may have been overdone. Furthermore, traders could be responding to the tightening of the spread between U.S. Government bond yields and German Government bond yields, which is making the U.S. Dollar a less-attractive investment.

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At 11:30 GMT, the EUR/USD is trading 1.1308, up 0.0006 or +0.05%.

The Euro is also being helped by a better-than-expected German Ifo Business Climate report. It came in at 99.6 versus the 98.7 forecast. The news also helped yields on benchmark U.S. 10-year Treasury bonds rise back above three-month rates during the European trade on Monday.


Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside last week with the formation of a weekly closing price reversal top.

The main trend will resume on a trade through 1.1448. A move through 1.1177 will change the main trend to down.

The main range is 1.1570 to 1.1177. Its retracement zone at 1.1374 to 1.1420 is resistance. The short-term range is 1.1177 to 1.1448. Its retracement zone at 1.1313 to 1.1281 is support. It is currently being tested. The near-term direction of the EUR/USD will be determined by trader reaction to this area.


Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at 1.1310 and the uptrending Gann angle at 1.1297.

Bullish Scenario

A sustained move over 1.1310 will indicate the presence of buyers. However, the trigger point for an acceleration to the upside is 1.1313. Overtaking this level with strong volume could lead to an eventual test of the main 50% level at 1.1374.

Bearish Scenario

A sustained move under 1.1297 will signal the presence of sellers. This could lead to a quick break into the short-term Fibonacci level at 1.1281. This price level is a potential trigger point for an acceleration into the next uptrending Gann angle at 1.1237.

Alternative Move

Using the short-term retracement zone for guidance, look for an upside bias to develop on a sustained move over the 50% level at 1.1313 and for a downside bias to develop in a sustained move under 1.1281.

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