James Hyerczyk
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The Euro is trading higher against the U.S. Dollar on Friday as risk appetite recovered across markets, after Federal Reserve officials helped calm jitters this week about accelerating U.S. inflation.

On Wednesday, the government reported that U.S. consumer inflation surged by the most in nearly 12 years in April on booming demand. However, Federal Reserve officials have played down expectations of tighter policy, stressing price rises from the reopening of the economy should be “transitory”.

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At 09:57 GMT, the EUR/USD is trading 1.2109, up 0.0029 or +0.24%.

We could see more volatility later today with a slew of U.S. data starting with Retail Sales and Core Retail Sales at 12:30 GMT. This is followed at 13:15 GMT by reports on Industrial Production and Capacity Utilization. At 14:00 GMT, reports from the University of Michigan on Consumer Sentiment and Inflation Expectations are due to be released.


Daily Swing Chart 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 May 11.

A trade through 1.2181 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 1.1986.

The minor trend is also up. A trade through 1.2052 will change the minor trend to down. This will confirm the shift in momentum.

The EUR/USD is currently straddling a pair of 50% levels at 1.2084 and 1.2116.

On the downside, the first support zone is 1.2037 to 1.1973. The second support area is 1.1943 to 1.1886.


Daily Swing Chart Technical Forecast

The early price action suggests the direction of the EUR/USD on Friday is likely to be determined by trader reaction to 1.2084 and 1.2116. Trading between these levels will indicate a neutral tone.

Bullish Scenario

A sustained move over 1.2116 will indicate the presence of buyers. If this move can create enough upside momentum then look for a possible acceleration into 1.2181.

Bearish Scenario

A sustained move under 1.2084 will signal the presence of sellers. The first downside target is the minor bottom at 1.2052, followed by the Fibonacci level at 1.2037. The latter is a potential trigger point for an acceleration to the downside.

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

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