The EUR/USD is trading slightly better early in the European Session. The Euro has been receiving support all week by expectations that the European Central Bank would announce at its policy meeting later this month that it would wind back its 2.3 trillion Euro bond-buying program.
The Euro is also being supported after Catalonia stopped short of formally declaring independence from Spain.
Daily Technical Analysis
The main trend is up according to the daily swing chart. It turned up on Wednesday when the EUR/USD crossed the last main top at 1.1832. The next major upside target is the September 20 main top at 1.2033. The trend will change to down on a trade through 1.1668.
The main range is 1.2033 to 1.1668. The EUR/USD is currently testing its retracement zone at 1.1850 to 1.1894. Trader reaction to this zone will determine the longer-term direction of the market.
This zone is important because aggressive counter-trend traders may show up in an attempt to stop the rally in an effort to form a potentially secondary lower top.
Based on the current price at 1.1863 and the earlier price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the 50% level at 1.1850 and the downtrending angle at 1.1873.
A sustained move over 1.1873 will signal the presence of buyers. This could trigger a fast rally into the Fibonacci level at 1.1894. Sellers could show up on the first test of this level. It is also the trigger point for an acceleration to the upside with the next target angle coming in at 1.1953. This is the last potential support angle before the 1.2033 main top.
A sustained move under 1.1850 will indicate the presence of sellers. This could lead to a quick break into a steep uptrending angle at 1.1828. This angle has guided the market higher since October 6.
If the angle at 1.1828 fails as support then look for an acceleration to the downside with the next target angle coming in at 1.1748.