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James Hyerczyk

The Euro is trading lower against the U.S. Dollar on Monday on long liquidation following the release of muted Euro Zone economic data and ahead of a key speech from new European Central Bank President Christine Lagarde later in the session. The single-currency, however, is being underpinned by hopes that the United States may choose not to impose tariffs on auto imports.

At 14:30 GMT, the EUR/USD is trading 1.1151, down 0.0016 or -0.14%.

Earlier today, Germany’s manufacturing sector remained firmly in contraction at the start of the final quarter of the year, according to the latest PMI data from HIS Markit and BME. October saw further marked – albeit slower – decreases in both output and new orders, while employment dropped to the greatest extent since January 2010 and destocking efforts intensified.

Lagarde gives her first speech on Monday at 19:30 GMT as ECB chief, and markets are assuming she will stick with the easy policy script of her predecessor, Mario Draghi.

Finally, U.S. Commerce Secretary Wilbur Ross said in an interview published on Sunday that Washington may not need impose tariffs on imported vehicles later this month after holding “good conversations” with automakers in the European Union, Japan and Korea.


Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1179 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.1073.

The minor trend is also up. A trade through 1.1128 will change the minor trend to down. This will also shift momentum to the downside.

The first minor range is 1.1179 to 1.1073. Its 50% level or pivot is 1.1126. This is the nearest support.

The second minor range is 1.0991 to 1.1179. Its 50% level or pivot is 1.1085. This is additional support.

The main range is 1.0879 to 1.1179. If the main trend changes to down then its retracement zone at 1.1029 to 1.0994 will become the primary downside target.


Daily Technical Forecast

Based on the early price action and the current price at 1.1151, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the downtrending Gann angle at 1.1154.

Bullish Scenario

A sustained move over 1.1154 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into last week’s high at 1.1176, followed by the main top at 1.1179 and the major Fibonacci level at 1.1185.

Bearish Scenario

A sustained move under 1.1154 will signal the presence of sellers. This could trigger a steep break into a potential support cluster formed by a downtrending angle at 1.1129, a minor bottom at 1.1128, a 50% level at 1.1126 and an uptrending Gann angle at 1.1119. Since the main trend is up, buyers could come in on a test of this area.

If 1.1119 fails as support then look for a potential acceleration to the downside with the next potential target level a 50% level at 1.1085.

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