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James Hyerczyk
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EUR/USD

The Euro is trading lower on Tuesday as a drop in demand for higher risk assets following a sell-off in the U.S. stock market encouraged investors to seek protection in the U.S. Dollar. The dollar’s rise against the Euro could also be a reflection of profit-taking and position-squaring ahead of upcoming U.S. economic reports and policy speeches by Federal Reserve members.

At 18:51 GMT, the EUR/USD is trading 1.2016, down 0.0047 or -0.39%.

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Tuesday’s rebound reversed losses sustained on Monday after a disappointing U.S. manufacturing survey report. Although April’s headline survey numbers were lower than March, the U.S. recovery remained firmly on track with price pressures rising, while the Federal Reserve appeared to be in no hurry to tighten.

Traders also feel that if Friday’s U.S. Non-Farm Payrolls report blows away the estimates then the Fed is going to have to start talking seriously about tapering sooner rather than later.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1994 will reaffirm the downtrend. The main trend will change to up on a move through 1.2150.

The intermediate range is 1.2243 to 1.1704. The EUR/USD is currently trading inside its retracement zone at 1.1974 to 1.2038.

The main range is 1.1603 to 1.2349. Its retracement zone at 1.1976 to 1.1888 is the primary downside target. This area is also controlling the near-term direction of the Forex pair.

The short-term range is 1.1704 to 1.2150. Its 50% level at 1.1927 is a potential downside target. It falls inside the main retracement zone.

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Short-Term Outlook

Trader reaction to 1.2038 will set the tone into the close.

Bearish Scenario

A sustained move under 1.2038 will indicate late session selling pressure. This could drive the EUR/USD through the 1.1994 main bottom and into the main 50% level at 1.1976.

Bullish Scenario

A sustained move over 1.2038 will signal the presence of buyers. This could trigger a late session short-covering rally into 1.2075.

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