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James Hyerczyk
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EUR/USD

The Euro is trading higher on Thursday as concerns about an earlier tapering by the Federal Reserve eased, pressuring U.S. Treasury yields and the U.S. Dollar. A recovery in demand for higher-risk assets following a sell-off in global equity and cryptocurrency markets is also helping to underpin the single-currency.

At 14:30 GMT, the EUR/USD is trading 1.2199, up 0.0023 or +0.19%.

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Late Wednesday, the Fed minutes revealed that several policymakers said that a discussion about reducing the pace of asset purchases would be appropriate “at some point” if the U.S. economic recovery continues to gain momentum.

The news surprised investors, causing some to unwind their short U.S. Dollar positions as they believed the Fed would remain on hold for the foreseeable future despite strong data. The Euro subsequently fell on the news.

The Fed minutes may have stalled the EUR/USD rally, but it’s much too early for a trend reversal.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing, however, Wednesday’s closing price reversal top may have stalled the rally.

A trade through 1.2245 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 1.2160 will confirm the closing price reversal top, shifting momentum to the downside.

The minor range is 1.2052 to 1.2245. Its 50% level at 1.2149 is the first support.

The main support is the 1.2037 to 1.1973 retracement zone. This area is controlling the near-term direction of the EUR/USD.

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Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.2160.

Bullish Scenario

A sustained move over 1.2160 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally back to 1.2245. Taking out this level will signal a resumption of the uptrend. This could create the upside momentum needed to challenge the January 6 main top at 1.2349 over the near-term.

Bearish Scenario

A sustained move under 1.2160 will signal the presence of sellers. This will shift momentum to the downside with 1.2149 the next likely downside target.

Buyers could come in on the first test of 1.2149, but if it fails then look for an acceleration to the downside with the next major target area 1.2052 to 1.2037.

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