EUR/USD Strengthens Over 1.1151, Weakens Under 1.1098

The Euro is edging lower on below average volume on Thursday as traders waited for the European Central Bank (ECB) and European Union leaders to shed light on the bloc’s policy response to Russia’s invasion of Ukraine.

On Wednesday, the single-currency posted its biggest daily jump since 2016 in reaction to a risk-on shift in sentiment that lifted equity markets and bond yields and saw oil price drop amid optimism about diplomatic efforts to resolve what the Kremlin refers to as a “special operation” to disarm Ukraine.

At 12:24 GMT, the EUR/USD is trading 1.1047, down 0.0026 or -0.24%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $102.67, up $1.45 or +1.43%.

Ahead of the ECB announcements, Euro investors are hoping policymakers drop some clues as to how they intend to balance the risk of higher inflation with the damage war in Ukraine will cause to economic growth.

“We think that normalization of monetary policy is likely to be delayed but not derailed,” Unicredit analysts wrote in a morning note.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1389 will change the main trend to up. A move through 1.0806 will signal a resumption of the downtrend.

The minor range is 1.0806 to 1.1095. Its 50% level or pivot at 1.10951 is the nearest downside target and potential support.

On the upside, the key targets and potential resistance are a pair of 50% levels at 1.1098 and 1.1151. The latter is also a potential trigger point for an acceleration to the upside.

Daily Swing Chart Technical Analysis

The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1098 and 1.1151.

Bearish Scenario

A sustained move under 1.1098 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 1.10951.

Watch for counter-trend buyers on the first test of 1.0951. If it fails then look for the selling to possibly extend into 1.0871, followed by the main bottom at 1.0806.

Bullish Scenario

A sustained move over 1.1151 will signal the presence of buyers. This could trigger a potential acceleration to the upside with 1.1389 the next near-term target.

Side Notes

Trading between 1.1098 and 1.1151 will indicate investor indecision and impending volatility.