The Euro is flat-lining against the U.S. Dollar for a second-session early Tuesday as the major players return following a long U.S. holiday weekend.
The single-currency is being propped up by buyers defending the January 3, 2017 main bottom at 1.0339, which could be the trigger point for an acceleration to the downside and a steep plunge.
Helping to put a lid on the common-currency is safe-haven demand for the U.S. Dollar amid worries about slowing global growth.
The divergence in policy between the U.S. Federal Reserve and European Central Bank (ECB) to soaring inflation is another factor weighing on the Euro. The Fed is widely expected to follow its 75-basis point rate hike in June with another in late July. However, the ECB is only expected to hike rates on July 21 by a comparatively small 25 basis point.
Trader reaction to 1.0428 is likely to determine the direction of the EUR/USD early Tuesday.
A sustained move over 1.0428 will indicate the presence of buyers. The first upside target is a minor pivot at 1.0487. Sellers could come in on the first test of this level. Overcoming it, however, could trigger an acceleration into the short-term 50% level at 1.0567, followed by a resistance cluster at 1.0615 – 1.0616.
A trade through 1.0616 will change the main trend to up, and could trigger an acceleration to the upside.
A sustained move under 1.0428 will signal the presence of sellers. This could trigger a break into a series of main bottoms at 1.0359, 1.0354 and 1.0339.
Trader reaction to 1.0339 could determine the near-term direction of the EUR/USD. This is an important bottom because the daily chart indicates the next major downside target is the December 2, 2002 main bottom at .9860.
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This article was originally posted on FX Empire