Euro Still Holding Support at 1.1335 – 1.1300

The Euro is trading lower against the U.S. Dollar on Thursday after giving back earlier gains. Traders seemed to shrug-off the Euro Zone December inflation report that confirmed a record 5.0 rate amid an energy surge.

The choppy trade the last two days suggests investors may already be preparing for next week’s U.S. Federal Reserve meeting. At this meeting, policymakers are expected to lay out their plans for ending quantitative easing and implementing their first rate hike.

At 13:06 GMT, the EUR/USD is trading 1.1337, down 0.0007 or -0.06%. On Thursday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $105.44, up $0.30 or +0.28%.

Euro Zone consumer prices jumped at a record high pace in December, the EU’s statistics agency confirmed Thursday, boosted by a surge in energy prices and supply chain bottlenecks as the economy recovers from pandemic lockdowns.

The European Union’s statistics office Eurostat said consumer prices in the 19 countries sharing the Euro rose 0.4% month-on-month in December for a 5.0% year-on-year jump, the same as the initial estimate published on January 7.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on January 14.

A trade through 1.1272 will change the main trend to down. A move through 1.1483 will negate the closing price reversal top and signal a resumption of the uptrend.

The short-term range is 1.1186 to 1.1483. The EUR/USD is currently testing its retracement zone at 1.1335 to 1.1300.

The minor range is 1.1483 to 1.1315. Its 50% level at 1.1399 is the nearest resistance.

The main range is 1.1692 to 1.1186. Its retracement zone at 1.1439 to 1.1499 is resistance. It stopped the rally at 1.1483.

Near-Term Outlook

The near-term direction of the EUR/USD is likely to be determined by trader reaction to 1.1335 and 1.1300.

Bullish Scenario

A sustained move over 1.1335 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 1.1399.

Bearish Scenario

A sustained move under 1.1335 will be the first sign of weakness. Taking out 1.1300, however, could trigger a quick break into the main bottom at 1.1272.

A move through 1.1272 will change the main trend to down. This could trigger a further break into a pair of main bottoms at 1.1235 and 1.1222.