Yahoo Finanza EUR/USD Forex Technical Analysis – ECB Rate Decision, Pipeline Reopening Mean Heightened Volatility
The Euro closed lower against the U.S. Dollar on Wednesday after reversing earlier losses as traders squared positions ahead of the European Central Bank’s (ECB) monetary policy and interest rate decisions on Thursday.
The volatile price action suggests investors may be reluctant to carry long bets into the meeting due to the uncertainty over whether the central bank will raise rates by 25 basis points or 50 basis points.
On Wednesday, the EUR/USD settled at 1.0183, down 0.0044 or -0.43%. This was down from an intraday high of 1.2073. The Invesco CurrencyShares Euro Trust ETF (FXE) finished at $94.05, down $0.45 or -0.48%.
Energy Crisis Back in Headlines
While Reuters was reporting that a key Russian gas pipeline would reopen on time after maintenance, the European Union told member states on Wednesday to cut gas usage by 15% until March. This emergency step was prompted by a warning from Russian President Vladimir Putin that Russian supplies sent via the biggest pipeline to Europe could be reduced further and might even stop.
Looking Ahead…
With the ECB meeting and the reopening of the Nord Stream 1 conduit after a 10-day shutdown taking place on the same day, investors should be bracing for heightened volatility. Most investor bets seem to be leaning toward a 25 basis point rate hike, so a surprise 50 basis point decision could add to the volatility.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 1.0615 will change the main trend to up. A move through .9952 will signal a resumption of the downtrend.
The minor trend is up. This is controlling the upside momentum.
The minor range is .9952 to 1.2073. Its retracement zone at 1.0113 to 1.0075 is the nearest downside target and potential support.
On the upside, short-term resistance is a 50% level at 1.0284. This is followed by intermediate retracement zone resistance at 1.0363 to 1.0460.
Daily Swing Chart Technical Forecast
Trader reaction to 1.1115 is likely to determine the direction of the EUR/USD early in the session on Thursday.
Bearish Scenario
A sustained move under 1.1115 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor retracement zone at 1.0113 to 1.0075.
Counter-trend buyers could come in on the first test of 1.0113 to 1.0075. They are going to try to form a potentially bullish secondary higher bottom. If 1.0075 fails then look for the start of an acceleration to the downside.
Bullish Scenario
A sustained move over 1.1115 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the resistance cluster at 1.2073 to 1.0284.
Taking out 1.0284 will indicate the buying is getting stronger with 1.0363 the first target, followed by 1.0460. Since the main trend is down, look for sellers on the first test of 1.0363 to 1.0460.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
