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James Hyerczyk

The Euro is trading slightly better against the U.S. Dollar on Tuesday as an aggressive move by the People’s Bank of China (PBOC) to control the Yuan on Monday continues to rattle the stability of the Forex markets for a second session. Traders are also continuing to assess the possibility of a U.S. fiscal stimulus deal and the outcome of the U.S. presidential election.

At 12:52 GMT, the EUR/USD is trading 1.1796, up 0.0001 or +0.01%.

In other news, investor sentiment in Germany fell by more than expected in October as a rise in coronavirus cases and the risk of a no Brexit trade deal increased uncertainty about the outlook for Europe’s largest economy, the ZEW economic research institute said.

The survey of investors’ economic sentiment fell to 56.1 from 77.4 points the previous month, ZEW said on Tuesday. A Reuters poll had pointed to a fall to 73.0.

“The sharp rise in the number of COVID-19 cases has increased uncertainty about future economic development, as has the prospect of the UK leaving the EU without a trade deal,” ZEW President Achim Wambach said in a statement.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 1.1872 will change the main trend to up. A move through 1.1612 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through 1.1831 will indicate the minor trend is getting stronger. The minor trend will change to down on a move through 1.1725.

The short-term range is 1.2011 to 1.1612. Its retracement zone at 1.1811 to 1.1859 is potential resistance. This zone is controlling the near-term direction of the EUR/USD. This area stopped the rally on Friday at 1.1831.

The minor range is 1.1872 to 1.1612. Its retracement zone at 1.1773 to 1.1742 is potential support.


Daily Swing Chart Technical Forecast

The early price action suggests the key level to watch today is the 50% level at 1.1811.

Bearish Scenario

A sustained move under 1.1811 will indicate the presence of sellers. The first downside target is 1.1773. If this fails then look for the selling to possibly extend into the 50% level at 1.1742.

Bullish Scenario

Holding 1.1773 will be the first indication of counter-trend buying. Overtaking 1.1811 will indicate the buying is getting stronger. This could create the upside momentum needed to take out 1.1831 with 1.1859 the next target.

Looking at the bigger picture, the EUR/USD is likely to trade sideways-to-lower until buyers can take out 1.1859 with conviction. This move could launch an acceleration to the upside.

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

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