The Euro is trading higher late Wednesday after finding support earlier in the session near a one-month low amid expectations European Central Bank (ECB) policymakers would strike a cautious tone when they meet on Thursday.
Like the Bank of Japan (BOJ) said earlier in the week, the ECB is likely to acknowledge that downside risks have subsided mostly due to the signing of Phase One of the U.S.-China trade deal, but there is no need to signal that policymakers plan to deviate from their current policy message.
At 16:54 GMT, the EUR/USD is trading 1.1085, up 0.0003 or +0.03%.
As far as economic data is concerned, earlier this week, a survey by Germany’s ZEW research institute showed on Monday investors’ mood improved more than expected in January and the signing of a China-U.S. trade pact raised hopes Europe’s economy would recover.
But analysts say the improvement in the business surveys is not yet evident in actual economic activity, which remained weak at the end of last year.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The downtrend resumed earlier today when sellers took out Monday’s low at 1.1077. A trade through the last main bottom at 1.1067 will reaffirm the downtrend.
The main trend will change to up on a move through 1.1173. This is highly unlikely but there is the possibility of a closing price reversal bottom.
The minor trend is also down. A trade through 1.1118 will change the minor trend to up. This will shift momentum to the upside.
The first major range is 1.0879 to 1.1313. The EUR/USD is currently trading inside its retracement zone at 1.1096 to 1.1045.
The second major range is 1.1413 to 1.0879. Its retracement zone at 1.1146 to 1.1209 is potential resistance.
The short-term range is 1.1239 to 1.1070. Its 50% level at 1.1155 is a potential upside target. This is followed by a long-term Fibonacci level at 1.1185.
Daily Technical Forecast
Based on the early price action and the current price at 1.1085, the direction of the EUR/USD into the close on Wednesday is likely to be determined by trader reaction to a downtrending Gann angle at 1.1093 and an uptrending Gann angle at 1.1071.
Taking out 1.1093 will indicate the presence of buyers. This is followed closely by the 50% at 1.1096. This price is a potential trigger point for an acceleration into the minor top at 1.1118 and a downtrending Gann angle at 1.1133.
The failure to take out 1.1093 will indicate weak buying or strong selling. This could trigger a break into a long-term uptrending Gann angle at 1.1071. This angle stopped the selling earlier in the session.
Taking out 1.1071 could lead to a test of the main bottom at 1.1067. If this fails then look for the selling to possibly extend into 1.1045.
Basically looking for an upside bias to develop on a sustained move over 1.1096 and for the downside bias to continue under 1.1070.
This article was originally posted on FX Empire
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