The Euro is trading lower against the U.S. Dollar on Monday amid escalating tensions in the Middle East after a weekend drone attack on key Saudi oil facilities. A steep rise in crude oil prices could become a threat to the global economy, which is encouraging investors to reduce exposure in the Euro with safe-haven positions in U.S. Treasury yields, the Japanese Yen and gold.
At 11:08 GMT, the EUR/USD is trading 1.1043, down 0.0029 or -0.27%.
Traders are also booking profits after last week’s steep short-covering rally was fueled by aggressive actions by the European Central Bank, which may have sent a signal that the central bank is out of weapons to turnaround the Euro Zone economy.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up last week when buyers took out the previous main top at 1.1085. A trade through 1.0927 and 1.0926 will signal a resumption of the downtrend.
The main range is 1.1164 to 1.0926. Its retracement zone at 1.1045 to 1.1073 may be developing into resistance. Furthermore, it appears that this zone may be controlling the near-term direction of the market.
The short-term range is 1.0927 to 1.1110. Its retracement zone at 1.1019 to 1.0997 is the next downside target. Since the main trend is up, buyers could come in on a test of this area. They will be trying to produce a potentially bullish secondary higher bottom.
Daily Technical Forecast
Based on the early price action and the current price at 1.1043, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the 50% level at 1.1045.
A sustained move under 1.1045 will indicate the presence of sellers. This could drive the EUR/USD into a price cluster at 1.1019 to 1.1016.
Crossing to the weak side of the downtrending Gann angle at 1.1014 could lead to a test of the short-term Fibonacci level at 1.0997.
A sustained move over 1.1045 will signal the presence of buyers. If this creates enough upside momentum then look for a potential rally into the main Fibonacci level at 1.1073, followed by a downtrending Gann angle at 1.1089. This is a potential trigger point for an acceleration into an uptrending Gann angle at 1.1106 and last week’s high at 1.1110.
This article was originally posted on FX Empire
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