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James Hyerczyk

The Euro is trading lower against the U.S. Dollar on Thursday. The immediate pressure on Euro is being fueled by position-squaring ahead of today’s U.S. Federal Reserve interest rate decision and monetary policy statement. However, the simmering tensions between the European Union and the Italian government over Italy’s budget deficient is back in the news. In addition to the Euro Zone’s slowing economic growth.

At 1223 GMT, the EUR/USD is trading 1.1419, down 0.0008 or -0.05%.

Today, at 1900 GMT, the Fed is expected to keep its benchmark interest rate unchanged. Traders aren’t expecting any major decisions either. The Fed’s monetary policy statement is also expected to remain hawkish, strongly pointing toward a December interest rate hike.

As far as EU-Rome is concerned, earlier in the week, Euro Zone finance ministers called on Italy to revise its planned 2019 budget within a week, after the European Commission rejected the budgetary plans of Rome’s populist coalition government. Rome is reluctant to make any changes to its budget.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 1.1555 will change the main trend to up. A move through 1.1301 will signal a resumption of the downtrend.

The minor trend is up. This is why momentum is trending higher. Taking out 1.1501 will indicate the buying is getting stronger. The minor trend changes to down on a move through 1.1355.

The short-term range is 1.1302 to 1.1501. Its retracement zone at 1.1402 to 1.1378 is the primary downside target. Traders are going to try to establish support inside this zone.

The intermediate range is 1.1555 to 1.1302. Its resistance zone at 1.1428 to 1.1458 is resistance.

The major, long-term resistance zone is 1.1498 to 1.1559. This zone stopped the rally on Wednesday at 1.1501.


Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the 50% level at 1.1428.

A sustained move under 1.1428 will signal the presence of sellers. This could lead to a retest of the short-term retracement zone at 1.1402 to 1.1378. The daily chart indicates there is plenty of room to the downside under 1.1378. After clearing 1.1355, the Forex pair could plunge to 1.1301.

A sustained move over 1.1428 will indicate the presence of buyers. If upside momentum builds on the move then look for the buying to extend into 1.1458 then 1.1498 to 1.1501. The latter is the trigger point for an even steeper breakout to the upside.

With the EUR/USD currently surrounded by retracement levels, we could continue to see a choppy, two-sided trade over the near-term.

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