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EUR/USD Short-Sellers Targeting May 2020 Bottom at 1.0871

By:
James Hyerczyk
Published: Mar 3, 2022, 16:30 UTC

The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1125.

EUR/USD

In this article:

The Euro is trading lower against the U.S. Dollar at the mid-session on Thursday after touching its lowest level since May 28, 2020. The catalyst pressuring the market is a fresh surge in energy prices that heightened worries about the Euro area economic outlook.

At 15:54 GMT, the EUR/USD is trading 1.1066, down 0.0059 or -0.53%. The Invesco CurrencyShares Euro Trust ETF (FXE) is trading $102.77, down $0.48 or -0.47%.

The single currency is down about 1.6% so far this week and is heading for a fourth consecutive weekly loss against the U.S. Dollar.

In economic news, Euro Zone inflation hit a record high of 5.8% last month, data on Wednesday showed. The problem for the European Central Bank (ECB), which meets next week, that while the war in Ukraine is likely to boost inflation further, it is a negative for both growth and inflation in the longer term.

“It’s still going down,” said Kit Juckes, chief global currency strategist at Societe Generale in London, referring to the Euro. “Look at gas prices. This is the clinch point in terms of the economic impact of the war, and it is going to hurt.”

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1058 will signal a resumption of the downtrend. A move through 1.1389 will change the main trend to up.

The first minor range is 1.1389 to 1.1058. Its 50% level at 1.1224 is the nearest resistance.

The second minor range is 1.1495 to 1.1058. Its pivot at 1.1282 is additional resistance.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1125.

Bearish Scenario

A sustained move under 1.1125 will indicate the presence of sellers. The first downside target is 1.1058. Taking out this level will signal a resumption of the downtrend. It could also trigger the start of an acceleration to the downside since there is no support until the May 25, 2020 main bottom at 1.0871.

Bullish Scenario

A sustained move over 1.1125 will signal the presence of buyers. If this creates enough upside momentum then look for a possible surge into the first minor pivot at 1.1224.

Side Notes

A close over 1.1125 will form a closing price reversal bottom. If confirmed, it could trigger the start of a 2-3 day counter-trend rally.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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