The Euro is trading firmer against the U.S. Dollar for a second session on Wednesday. Most of the strength is being fueled by traders lifting long hedge positions in the dollar, placed as protection against the economic impact of the coronavirus. Hedgers are lightening up their positions in the greenback on reports of a slowing in the spread of the virus.
At 11:32 GMT, the EUR/USD is trading 1.0915, down 0.0003 or -0.03%.
Traders are showing little response to comments from Federal Reserve Chairman Jerome Powell on Tuesday. He basically delivered what traders were expecting. He reiterated his view that the U.S. central bank is unlikely to change interest rates in the near-term.
With risks like trade policy uncertainty receding and global growth stabilizing, Powell signaled he saw no reason to adjust U.S. interest rates, unless new developments cause a “material reassessment” to the current outlook.
Daily Technical Analysis
The main trend is down according to the daily swing chart, however, momentum may be getting ready to shift to the upside with the formation of the closing price reversal bottom on Tuesday.
A trade through 1.0891 will negate the closing price reversal bottom and signal a resumption of the downtrend.
A move through 1.0925 will confirm the closing price reversal bottom. This won’t change the trend, but it will indicate the buying is a little stronger than the selling at current price levels. This could trigger a 2 to 3 day counter-trend retracement.
The short-term range is 1.1095 to 1.0891. Its 50% level at 1.0993 is the next potential upside target.
Daily Technical Forecast
Based on the early price action and the current price at 1.0915, the direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the long-term uptrending Gann angle at 1.0908.
A sustained move over 1.0908 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into the resistance cluster at 1.0935 to 1.0938. Since the main trend is down, look for sellers on the first test of this area.
Overtaking 1.0938 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the next target the 50% level at 1.0993.
A sustained move under 1.0908 will signal the presence of sellers. The first target is yesterday’s low at 1.0891. Taking out this level could trigger a move into the October 1, 2019 main bottom at 1.0879. This is a potential trigger point for an acceleration to the downside with the May 11, 2017 bottom at 1.0838 the next likely target.
This article was originally posted on FX Empire
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