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James Hyerczyk

The Euro hit a fresh eight-week high on Thursday, bolstered by a 750 billion Euro European Union plan to prop up the bloc’s virus-hit economies. But it is facing headwinds as doubts about delivery the scheme crept in.

“It is probably too early to say that the rally in the Euro is the start of a major re-rating of European risk,” said Chris Turner, global head of markets at ING, in a note.

“The path to getting (the) recovery fund carved out of the long-term EU budget will be a bumpy one…thus it is hard to make the case that (the) Euro moves higher in a straight line from current levels.”

At 13:56 GMT, the EUR/USD is trading 1.1038, up 0.0030 or +0.27%.

In other news, first-time claims for U.S. unemployment benefits totaled 2.1 million last week, the lowest total since the coronavirus crisis began though indicative that a historically high number of Americans remain separated from their jobs. Economists were looking for a 2.05 million increase.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Thursday when buyers out the May 1 top at 1.1018. The main trend will change to down on a move through the last swing bottom at 1.0871.

The main range is 1.1496 to 1.0636. Its retracement zone at 1.1066 to 1.1167 is the next upside target. Sellers could show up on a test of this zone.

The short-term retracement zone at 1.0987 to 1.0937 is the first support. The intermediate retracement zone at 1.0892 to 1.0831 is the second support.


Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1026, the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to the short-term Fibonacci level at 1.0987.

Bullish Scenario

A sustained move over 1.0987 will indicate the presence of buyers. Now that the main tops at 1.1008 and 1.1018 are out of the way, the Forex pair has a clear shot at the 50% level at 1.1066. This is a potential trigger point for an acceleration into the main top at 1.1147 and the main Fibonacci level at 1.1167.

Bearish Scenario

The inability to overtake 1.1066 will be the first sign of selling pressure, but the bullish tone will be tarnished if 1.0987 fails as support. This could lead to a pullback into at least 1.0937.

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