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James Hyerczyk
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EUR/USD

The Euro is under pressure on Monday after hitting its lowest level against the U.S. Dollar since August 27 earlier in the session. The dollar strengthened as market expectations build that the Federal Reserve could taper its stimulus sooner rather than later despite a surge in COVID-19 cases.

At 13:33 GMT, the EUR/USD is trading 1.1793, down 0.0018 or -0.15%.

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The Wall Street Journal reported on Friday that Fed officials will seek to make an agreement to begin paring bond purchases in November.

In other news, a key market gauge of Euro Zone inflation expectations rose to its highest level since mid-2015 on Monday, a further sign that investor perceptions over the direction of future inflation are shifting.

Last week, the European Central Bank (ECB) said it would start to trim its own emergency bond purchases due to a sharp rise in Euro Zone inflation.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

A trade through 1.1664 will change the main trend to down. A move through 1.1909 will signal a resumption of the uptrend.

The minor trend is down. It changed to down earlier in the session when sellers took out the minor bottom at 1.1802. This shifted momentum to the downside.

The main range is 1.1603 to 1.1975. The EUR/USD is currently trading on the weak side of its retracement zone at 1.1820 to 1.1856, making it resistance.

The short-term range is 1.1664 to 1.1909. Its retracement zone at 1.1787 to 1.1758 is potential support. It stopped the selling earlier today at 1.1770.

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Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Monday will be determined by trader reaction to the main 50% level at 1.1820.

Bearish Scenario

A sustained move under 1.1820 will indicate the presence of sellers. The first downside target is the short-term 50% level at 1.1787, followed by the intraday low at 1.1787.

If 1.1787 fails as support then look for the selling to possibly extend into the short-term Fibonacci level at 1.1758. This is a potential trigger point for an acceleration into the next major support at 1.1664.

Bullish Scenario

Overtaking 1.1820 will signal the return of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into 1.1851 to 1.1856.

Side Notes

For day-traders, use the 50% level at 1.1787 as an intraday pivot.

For a look at all of today’s economic events, check out our economic calendar.
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