EUR/USD Struggling to Find Direction Amid Low Volume

The Euro is trading higher against the U.S. Dollar on Monday in a thinly traded session due to a U.S. bank holiday. The price action suggests a relief rally may be taking place after Russia did not invade the Ukraine over the weekend.

Additionally, the single-currency strengthened and the greenback weakened as investors pulled capital out of safe havens after U.S. President Joe Biden and Russian President Vladimir Putin agreed in principle to meet to discuss the crisis in Ukraine.

At 13:13 GMT, the EUR/USD is trading 1.1339, up 0.0015 or +0.13%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $105.16, down $0.27 or -0.26%.

In economic news, the Euro Zone economic recovery regained momentum this month as an easing of coronavirus restrictions gave a boost to the bloc’s dominant service industry, a survey showed, but consumers faced prices rising at a record rate, according to Reuters.

IHS Markit’s Flash Composite Purchasing Managers’ Index, seen as a guide to overall economic health, jumped to a five-month high of 55.8 in February from 52.3 in January, significantly above the median 52.7 forecast in a Reuters poll.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1280 will reaffirm the downtrend. A move through 1.1495 will change the main trend to up.

The minor trend is also down. A trade through 1.1395 will change the minor trend to up. This will shift momentum to the upside. A new minor bottom was formed at 1.1313.

The first minor range is 1.1495 to 1.1280. Its 50% level at 1.1387 stopped the rally earlier in the session.

The second minor range is 1.1280 to 1.1395. The EUR/USD is currently testing its 50% level at 1.1338.

The short-term range is 1.1122 to 1.1495. Its retracement zone at 1.1308 to 1.1265 is support.

The main range is 1.1692 to 1.1122. Its retracement zone at 1.1407 to 1.1475 is resistance.

Short-Term Outlook

The price action on Monday suggests the direction of the EUR/USD into the close will be determined by trader reaction to 1.1338.

Bearish Scenario

Look for a downside bias on a sustained move under 1.1338. If this generates enough downside momentum then look for the selling to possibly extend into 1.1308 to 1.1265. Inside this zone is the last main bottom at 1.1280.

The Fibonacci level at 1.1265 is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over 1.1338 will signal the return of buyers. This could trigger a strong intraday rally into 1.1387, followed by 1.1407. Inside this area is a minor top at 1.1395.

The 50% level at 1.1407 is a potential trigger point for an acceleration to the upside.