EUR/USD Forex Technical Analysis – Trader Reaction to Minor Pivot at 1.1322 Sets the Tone

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The Euro is trading lower against the U.S. Dollar early Thursday after thin-trading conditions the previous session produced whipsaw-like action, taking out weak stops on both sides of the market.

Since there has been no follow-through to the upside after Wednesday’s higher close, we have to assume the choppy, two-sided trade was fueled by well-below average holiday volume. Additionally, the absence of the banks and institutions gave rogue traders and computer bots a chance to manipulate the trade.

At 06:56 GMT, the EUR/USD is trading 1.1317, down 0.0031 or -0.28%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $105.48, up $0.30 or +0.28%.

If you’re still searching for today’s weakness then blame it on higher U.S. 10-year Treasury yields which are making the U.S. Dollar a more attractive investment. Additionally, longer-term, the U.S. Dollar still holds an advantage over the Euro because the Federal Reserve is hawkish and the European Central Bank (ECB) is bearish.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, a trade through 1.1383 will change the main trend to up. A move through 1.1186 will signal a resumption of the downtrend.

All of the price action has taken place inside the 1.1186 to 1.1383 trading range since November 30. Until this zone is overtaken either up or down, look for a choppy, two-sided trade.

The minor range is 1.1274 to 1.1369. Its pivot is 1.1322.

The key support level is the long-term Fibonacci level at 1.1291.

On the upside, resistance is a pair of 50% levels at 1.1397 and 1.1439.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1322.

Bullish Scenario

A sustained move over 1.1322 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 1.1369, followed by 1.1383 and 1.1397.

Bearish Scenario

A sustained move under 1.1322 will signal the presence of sellers. The first downside target is 1.1291, followed by 1.1274.

If 1.1274 fails as support then look for the selling to extend into 1.1235 and 1.1222.