The direction of the EUR/USD into the close on Tuesday is likely to be determined by trader reaction to 1.1602.
The Euro is trading lower against the U.S. Dollar on Tuesday with the greenback primarily supported by a rise in U.S. Treasury yields.
The common currency is edging back towards last week’s low ahead of a key U.S. payrolls report on Friday that could boost the case for the Federal Reserve to start tapering stimulus as soon as November. A strong labor market report could also solidify the chances of a Fed rate hike in late 2022.
At 13:38 GMT, the EUR/USD is trading 1.1588, down 0.0031 or -0.27%.
While the European Central Bank has no plans to raise rates soon, the prospect of imminent tapering, signaled by the Federal Reserve, is lending support to the U.S. Dollar again. In view of the divergence between the ECB and the Fed, one should expect the U.S. Dollar to be stronger.
The main trend is down according to the daily swing chart. A trade through 1.1563 will signal a resumption of the downtrend. A move through 1.1755 will change the main trend to up.
The minor trend is down. A trade through 1.1640 will change the minor trend to up. This will shift momentum to the upside.
The minor range is 1.1563 to 1.1640. The EUR/USD is currently trading on the weak side of its pivot at 1.1563.
The second minor range is 1.1755 to 1.1563. Its 50% level at 1.1659 is potential resistance.
The direction of the EUR/USD into the close on Tuesday is likely to be determined by trader reaction to 1.1602.
A sustained move under 1.1602 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into 1.1563. This price is a potential trigger point for an acceleration to the downside.
A sustained move over 1.1602 will signal the presence of buyers. If this move generates enough upside momentum then look for a surge into the minor top at 1.1640. Taking this out will change the minor trend to up with 1.1659 the next likely upside target.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.