James Hyerczyk
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The EUR/USD is trading higher shortly before the U.S. opening. Traders are reacting to stronger-than-expected German ZEW Economic Sentiment which climbed to 17.0 points, easily beating the forecast of 12.3 points. Euro Zone ZEW Economic Sentiment improved to 31.7, but fell short of the estimate of 32.4 points.

Later today, investors will get the opportunity to react to U.S. Building Permits and Housing Starts. In addition, the U.S. Federal Open Market Committee also begins its two-day meeting.

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Daily Technical Analysis

The main trend is up according to the daily swing chart. Momentum has also been trending higher since the formation of the closing price reversal bottom at 1.1837 on September 14.

The main support and retracement zone is 1.1877 to 1.1826. This zone stopped the price slide last week at 1.1837.

The short-term range is 1.2092 to 1.1837. Its retracement zone at 1.1965 to 1.1995 is currently being tested. This zone is very important to the structure of the chart pattern.

Aggressive counter-trend traders are going to try to stop the rally in an effort to form a potentially bearish secondary lower top. Bullish traders are going to try to take out this zone in an effort to create enough upside momentum to challenge the main top at 1.2092.


Daily Forecast

Based on the current price at 1.1988 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 short-term Fibonacci level at 1.1995.

A sustained move over 1.1995 will indicate the presence of buyers. This could drive the market into a downtrending angle at 1.2022. This angle is the trigger point for a surge into the next downtrending angle at 1.2057. This is the last potential resistance angle before the 1.2092 main top.

A sustained move under 1.1995 will signal the presence of sellers. The first downside target is a support cluster at 1.1965 to 1.1957.

Crossing to the weak side of a downtrending angle at 1.1952 will indicate the selling is getting stronger. This could lead to an acceleration into the next uptrending angle at 1.1897.

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