The Euro is trading slightly better after giving up nearly all of its earlier gains. Shortly after the opening, the single currency rose on the hope that the United States and China are getting closer to a trade deal. The Euro Zone has been struggling because of a decline in business from China since the trade dispute started. A new trade deal between the US and China could increase demand for Euro Zone goods and services. This could revive the Euro Zone economy and help boost the Euro.
At 1140 GMT, the EUR/USD is trading 1.1451, up 0.0011 or +0.10%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum is trending higher due to the formation of a potentially bullish closing price reversal bottom on January 3.
Taking out 1.1497 will change the main trend to up. A move through 1.1309 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The major long-term retracement zone is 1.1447 to 1.1185. The EUR/USD has spent weeks inside this zone. It is clearly controlling the longer-term direction of the Forex pair.
The main range is 1.1622 to 1.1216. The EUR/USD is currently straddling its retracement zone at 1.1419 to 1.1467. Inside this zone is the major 50% level at 1.1447.
The fact that the EUR/USD has straddled the retracement cluster at 1.1467, 1.1447 and 1.1419 suggests investor indecision and impending volatility.
Daily Swing Chart Technical Forecast
Based on the price action this week, the direction of the EUR/USD over the near-term is likely to be determined by trader reaction to the 50% level at 1.1419 and the 61.8% level at 1.1467.
Look for a breakout to the upside on a sustained move over 1.1467, and for a breakout to the downside under 1.1419. However, in order to be successful, these moves are going to need above average volume. Breakouts tend to fail if there isn’t buying or selling volume behind them.
Looking at today’s price action, the EUR/USD could strengthen over 1.1467 and weaken under 1.1447. Once again above average volume will be the key to success.
If buyers can drive the EUR/USD through 1.1467 then look for a move into 1.1497 then 1.1501. The latter is the trigger point for a potential acceleration to the upside with 1.1555 the next target.
If sellers take control and drive prices under 1.1447 then look for a drive into 1.1419. This price is the trigger point for an acceleration to the downside with 1.1309 the next major target.
This article was originally posted on FX Empire
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