EUR/USD Forex Technical Analysis – Pressured by US Rate Hike, Euro Zone Debt Crisis Fears

The Euro is edging lower against the U.S. Dollar on Thursday, pressured by rising U.S. Treasury yields, shortly before the release of key U.S. economic reports on manufacturing, unemployment and housing. Traders are also digesting the impact of yesterday’s Federal Reserve rate hike and economic projections.

At 11:20 GMT, the EUR/USD is trading 1.0405, down 0.0042 or -0.41%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $96.70, up $0.33 or +0.34%.

ECB Holds Emergency Meeting

Traders are monitoring several European Central Bank speakers after the central bank promised to control borrowing costs for the Euro Zone’s periphery countries after an emergency meeting on Wednesday.

The ECB on Wednesday promised fresh support and the design of a potential new scheme to temper a market rout that has fanned fears of a new debt crisis on the Euro currency area’s southern rim.

The ECB’s decision to create a new tool to contain strain in Euro bond markets paves the way for it to deliver three, 50 basis point interest-rate increases this year, according to Deutsche Bank.

US Economic News

Data releases on Thursday will include May’s housing starts and building permits, along with last week’s jobless claims figures.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0359 will signal a resumption of the downtrend. A move through the May main bottom at 1.0354 and the January 3, 2017 main bottom at 1.0339 will reaffirm the downtrend. A trade through 1.0774 will change the main trend to up.

The minor trend is also down. A trade through 1.0508 will change the minor trend to up. This will shift momentum to the upside.

The minor range is 1.0508 to 1.0359. Its pivot is 1.0434. The second minor range is 1.0774 to 1.0359. If the minor trend changes to up then look for a possible test of its retracement zone at 1.0586 to 1.0630.

Daily Swing Chart Technical Forecast

Trader reaction to 1.0434 is likely to determine the direction of the EUR/USD on Thursday.

Bearish Scenario

A sustained move under 1.0434 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into 1.0359, 1.0354 and 1.0339. The latter is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over 1.0434 will indicate the return of buyers. This could trigger a surge into 1.0508. Taking out this level will shift momentum to the upside with 1.0586 to 1.0630 the next potential upside target area. Since the main trend is down, sellers are likely to come in on a test of this zone.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire