The EUR/USD is trading higher on Tuesday shortly ahead of the U.S. session opening. After two days of consolidation, the Euro broke out of a tight range to move to its highest level since October 26. The price action suggests investors have resumed buying risky assets in Europe on growing expectations that economic growth will remain strong against a backdrop of record low-interest rates.
Earlier in the session, European Central Bank President Mario Draghi said the ECB’s “forward guidance” on future policy moves has been successful in steering market expectations and is now an established policy tool.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up earlier today when buyers took out 1.1690. The next upside target is 1.1836. This top was made the day the European Central Bank said it would extend its asset purchase program until at least September.
The main range is 1.1879 to 1.1553. Its retracement zone at 1.1716 to 1.1755 is currently being tested.
The market also crossed to the strong side of a major long-term 50% level at 1.1702.
Daily Technical Forecast
Based on the current price at 1.1723, the direction of the market is likely to be determined by trader reaction to the main 50% level at 1.1716.
A sustained move over 1.1716 will indicate the buying is getting stronger. This could generate the upside momentum needed to challenge the main Fibonacci level at 1.1755, followed by a downtrending angle at 1.1771.
The failure to hold above 1.1716 will signal the presence of sellers. This could trigger a quick break into 1.1706 and 1.1702.
The daily chart opens up to the downside under 1.1702. This move could trigger an acceleration to the downside with 1.1653 the next target.
What the price action and read the order flow at 1.1716. Trader reaction to this level should set the tone the rest of the session.