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James Hyerczyk

The EUR/USD edged higher on Thursday after the government reported consumer prices rose less than economists were expecting in August. This new drove down U.S. Treasury yields, making the dollar a less-attractive investment.

The Labor Department said the Consumer Price Index rose 0.2 percent last month, missing expectations of a 0.3 percent gain. The so-called core CPI, which excludes volatile food and energy components, inched higher by 0.1 percent.


Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside following the formation of a closing price reversal bottom on September 10.

A trade through 1.1659 will change the trend to up. A move through 1.1526 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 1.1301 to 1.1734. Its retracement zone at 1.1518 to 1.1466 is support.

The intermediate range is 1.1734 to 1.1526. Its retracement zone at 1.1630 to 1.1655 is resistance. It is currently being tested. Trader reaction to this zone could set the tone for the day.

The short-term range is 1.1659 to 1.1526. Its 50% level or pivot is 1.1592. Holding above this level is helping to give the EUR/USD an upside bias.

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Daily 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 1.1630.

A sustained move over 1.1630 will indicate the presence of buyers. This could lead to a labored rally with targets at 1.1655, 1.1659 and a downtrending Gann angle at 1.1674.

The trigger point for a potential acceleration to the upside is 1.1674. Taking out this angle could trigger a move into the next downtrending Gann angle at 1.1704. This is the last potential resistance angle before the 1.1734 main top.

A sustained move under 1.1630 will signal the presence of sellers. The first downside target is a support cluster at 1.1592 to 1.1586. Look for a technical bounce on the first test of this area.

If 1.1586 fails as support then look for the selling to extend into the next uptrending Gann angle at 1.1556, followed by the main bottom at 1.1526.

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