EUR/USD Forex Technical Analysis – Major Fibonacci Level at 1.1185 to Control Direction in April

The Euro closed lower on Friday as it edged toward a key long-term retracement level and its March 7 main bottom. After topping on March 20, the single-currency has erased nearly all of its gains from earlier in month. For the month, the Euro was down 1.34%. For the year, the single-currency is down 2.18% against the U.S. Dollar.

Last month, the Euro delivered its worst performance since October, weighed down by fears about economic growth and cautious signals from the European Central Bank. Policymakers cut growth forecasts for the Euro Zone economy in early March, while launching a new round of cheap loans to its banks.

Throughout March, a combination of the dovish moves by the ECB and weaker-than-expected economic surveys from Germany drove hedge funds to aggressively reduce their long Euro positions.

On Friday, the EUR/USD settled at 1.1218, down 0.0006 or -0.05%.

Daily Swing Chart Technical Analysis

The highlight of the month were the long price swings by the EUR/USD. The first rally was 1.1176 to 1.1448. This move actually turned the main trend to up on the daily chart. However, the momentum shifted to the downside when a closing price reversal top formed on the weekly chart. This is what is driving the EUR/USD lower.

The main trend actually turns to down on the daily chart when sellers take out 1.1176. If this move is able to create enough downside momentum then look for the weakness to possibly extend into the June 20, 2017 main bottom at 1.1118 and the May 20, 2017 main bottom at 1.1109.

Traders should also note that the major range the EUR/USD is working inside was formed by the January 3, 2017 main bottom at 1.0339 and the February 16, 2018 main top at 1.2555. Its retracement zone at 1.1447 to 1.1185 has been controlling the direction of the Forex pair for months. During March, its 50% level at 1.1447 essentially helped put in the 1.1448. At the end of the month, the EUR/USD was rapidly approaching the Fibonacci level at 1.1185. Trader reaction to this level could set the tone for April.

Daily Swing Chart Technical Forecast

Based on Friday’s close at 1.1218 and the momentum into the close, the key area to watch will be 1.1185 to 1.1176. Watch for a technical bounce on the first test of this area. If this move is able to produce a daily closing price reversal bottom then we could see a 2 to 3 counter-trend rally.

If 1.1176 is taken out with conviction then look for the selling to possibly extend into 1.1118 to 1.1109. Also, 1.1185 will become new resistance.