EUR/USD Price Action Suggests Nervous Trade

The Euro is holding at a one-month high against the U.S. Dollar early Thursday on the hopes the war in Ukraine might be entering a new de-escalating phase. Meanwhile, U.S. Treasury yields eased for a fourth session, making the dollar a less-attractive investment.

Following weeks of sideways-to-lower price action, the Euro surged this week on aggressive short-covering, while U.S. Dollar investors liquidated safe-haven long dollar positions as tensions eased in Ukraine. This suggests future Euro gains would be dependent on further positive developments in the region.

At 04:07 GMT, the EUR/USD is trading 1.1162, up 0.0004 or +0.04%. On Wednesday, the Invesco CurrencyShares Euro Trust settled at $103.41, up $0.53 or +0.52%.

Cautious Traders Fear Russian Bluff

Although weak Euro shorts expressed optimism over the renewed peace talks, there isn’t much clear evidence of new speculative buying. This is likely because Ukraine and its Western allies dismissed Russia’s pledge for peace as a ploy to stem losses and prepare for other attacks. Earlier in the week, Reuters reported at peace talks in Istanbul, Russia said it would curtail operations near Kyiv and the northern city of Chernihiv to build trust.

Furthermore, Ukrainian forces are preparing for new Russian attacks in the east of the country, President Volodymyr Zelenskiy said on Thursday.

Daily Swing Chart Technical Analysis

The main trend is up. The uptrend was reaffirmed on Wednesday when buyers took out the previous main top at 1.1137. A trade through 1.0945 will change the main trend to down.

The current rally has been tentative since bullish investors have had to claw through a number of 50% levels. There is still a pair of levels standing in the way before we will see an acceleration in prices.

On the upside, the nearest resistance is 1.1207 and 1.1249. The latter is a potential trigger point for an acceleration into the next main top at 1.1389.

On the downside, a series of 50% levels are potential support levels. They include 1.1151 and 1.1098. If the selling accelerates then 1.1019 and 1.0972 will come into play.

Daily Swing Chart Technical Forecast

The early direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1151.

Bullish Scenario

A sustained move over 1.1151 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into 1.1207 and 1.1249.

A trade through 1.1249 will indicate the buying is getting stronger. This could trigger an acceleration to the upside since there is no resistance until 1.1389.

Bearish Scenario

A failure to hold 1.1151 will signal the presence of sellers. This could trigger a quick break into 1.1098. If this level fails as support then look for the selling to possibly extend into 1.1019 to 1.0972.