The Euro is trading lower on Tuesday in response to dovish comments from European Central Bank President Mario Draghi. The single-currency hit its lowest level in two weeks after Draghi said the ECB could still cut interest rates in an effort to stimulate the economy. The comments took investors by surprise as most were preparing for the start of the Fed’s two-day monetary policy meeting.
At 13:34 GMT, the EUR/USD is trading 1.1203, down 0.0014 or -0.12%.
At the European Central Bank (ECB) Forum in Sintra, Portugal, Draghi defended the tools that the organization has available, saying that its asset purchase program still has considerable headroom. Draghi also said that the ECB could cut interest rates again or provide asset purchases if inflation doesn’t reach its target.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The main trend will change to up on a trade through 1.1348. If the downside momentum continues then the two main bottoms at 1.1116 and 1.1107 will become the primary downside targets.
The main range is 1.1107 to 1.1348. Its retracement zone at 1.1227 to 1.1199 is currently being tested. Aggressive counter-trend buyers may try to form a secondary higher bottom inside this zone. Additional support is the major Fibonacci level at 1.1185. With the intraday low coming in at 1.1181, this Fib level essentially provided support.
Daily Technical Forecast
Based on the early price action and the current price at 1.1203, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the short-term Fibonacci level at 1.1199 and the uptrending Gann angle at 1.1197.
A sustained move over 1.1199 will indicate the presence of buyers. If this move generates enough upside momentum then we could see a retest of the 50% level at 1.1227. This is a potential trigger point for an acceleration to the upside with the next target angle coming in at 1.1268.
A sustained move under 1.1197 will signal the presence of sellers. This could lead to a retest of a downtrending Gann angle at 1.1188 and the major Fib at 1.1185. Crossing to the weak side of the pivot and taking out today’s intraday low at 1.1181 will put the EUR/USD in a bearish position. This could trigger an acceleration into the next uptrending Gann angle at 1.1152. This is the last major support angle before the 1.1116 and 1.1107 main bottoms.
Unless Draghi continues to make dovish remarks, the EUR/USD is likely to trade inside 1.1227 to 1.1199 as traders position themselves ahead of the Fed’s interest rate and monetary policy decisions on Wednesday.
This article was originally posted on FX Empire