EUR/USD: Relentless Selling Puts 1.0524 – 1.0493 on Radar

The Euro is trading at a five-year low on Wednesday after Russia halted gas supplies to Bulgaria and Poland amid rising investor concerns for the regional economy.

Russia’s decision to cut the gas flow to Bulgaria and Poland for rejecting its demand to pay in roubles took direct aim at European economies and added to the Euro’s woes – giving investors more reasons to snap up U.S. Dollars.

At 12:06, the EUR/USD is trading 1.0578, down 0.0059 or -0.56%. On Tuesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $98.65, down $0.64 or -0.65%.

Investors have been dumping the Euro all week and on Wednesday, the single-currency dropped below $1.06 with another half a percent decline. Analysts say the European common currency is being buffeted by the war in Ukraine and growing concerns that the bloc’s economy will fall into recession this year, according to Reuters.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the April 10, 2017 main bottom at 1.0569 will reaffirm the downtrend. A move through 1.0936 will change the main trend to up.

The new minor range is 1.0936 to 1.0575. Its retracement zone at 1.0756 to 1.0799 is the nearest resistance. This zone will move down as the Forex pair moves lower.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Wednesday is likely to be determined by trader reaction to 1.0637.

Bearish Scenario

A sustained move under 1.0637 will indicate the presence of sellers. Taking out 1.0569 will reaffirm the downtrend. This could trigger a further break into the March 9, 2017 main bottom at 1.0524, followed by the February 22, 2017 main bottom at 1.0493.

The latter is a major trigger point for an acceleration into the January 3, 2017 main bottom at 1.0339.

Bullish Scenario

A sustained move over 1.0637 will signal the presence of buyers. Taking out the intraday high at 1.0655 will indicate the buying is getting stronger. This could extend the short-covering rally for 2-3 days into 1.0756 – 1.0799. Since the main trend is down, sellers are likely to re-emerge following a test of this area.