The Euro is plunging on Friday after traders reduced expectations of an aggressive rate cut by the U.S. Federal Reserve at the end of the month and increased their bets on a rate cut by the European Central Bank at its policy meeting on July 25. According to CNBC, money markets are now pricing in a roughly 60% chance of a 10-basis point rate cut next week, versus a 40% chance earlier in the week.
At 12:50 GMT, the EUR/USD is trading 1.1223, down 0.0054 or -0.48%. This is down from an intraday high of 1.1282.
Daily Technical Analysis
The main trend is up according to the daily swing chart, but momentum has been trending lower since the formation of the closing price reversal top at 1.1413 on June 25 and the secondary lower top at 1.1286 on July 11.
A trade through 1.1200 will officially change the main trend to down. Taking out a swing bottom at 1.1193 will indicate the selling is getting stronger, while a move through the next swing bottom at 1.1181 could trigger an acceleration into a pair of main bottoms at 1.1116 and 1.1107.
The short-term range is 1.1193 to 1.1286. Its 50% level or pivot at 1.1240 is controlling the direction of the market today. The major resistance is a retracement zone at 1.1278 to 1.1318. Its 50% level at 1.1278 stopped the rally earlier in the session.
On the downside, the major support is the long-term Fibonacci level at 1.1185.
Daily Technical Forecast
Based on the early price action and the intraday downside momentum, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the pivot at 1.1240.
A sustained move under 1.1240 will indicate the presence of sellers. Crossing to the weak side of the downtrending Gann angle at 1.1233 will indicate the selling is getting stronger.
The EUR/USD could start to accelerate to the downside on the bearish side of the uptrending Gann angle at 1.1210. This could trigger a series of sell stops under 1.1200, 1.1193, 1.1185 and 1.1181.
Overcoming and sustaining a rally over 1.1240 will signal the presence of buyers. If this generates enough upside momentum then look for the intraday rally to possible extend into the main 50% level at 1.1278 and today’s intraday high at 1.1278.
This article was originally posted on FX Empire
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