The Euro is edging lower against the U.S. Dollar on Wednesday after an early session rally failed to attract enough buyers to sustain the move. The early rally was likely fueled by short-covering since there isn’t a strong conviction in the market to buy, given the weak Euro Zone fundamentals.
At 14:06 GMT, the EUR/USD is trading 1.0870, down 0.0011 or -0.10%.
A slight recovery in U.S. equity markets and Treasury yields is also weighing on the EUR/USD as investors continue to ponder the impact of the coronavirus on the Euro Zone and U.S. economies.
Euro Zone money markets started to fully price in a December interest rate cut from the European Central Bank on Wednesday, as the spread of coronavirus outside China pushed traders to ramp up expectations for more stimulus.
Daily Technical Analysis
The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a move through 1.1095, while a trade through 1.0778 will signal a resumption of the downtrend.
The minor trend is up. This is generating the upside momentum.
The minor range is 1.0926 to 1.0778. Its retracement zone at 1.0870 to 1.0852 is currently being tested.
The main range is 1.1095 to 1.0778. Its retracement zone at 1.0937 to 1.0874 is the next major upside target area. Since the trend is down, we’re expecting sellers to show up on a test of this zone.
Daily Technical Forecast
Based on the early price action and the current price at 1.0870, the direction of the EUR/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at 1.0858.
A sustained move over 1.0858 will indicate the presence of buyers. Overtaking the Fibonacci level at 1.0870 will indicate the buying is getting stronger. This could lead to a test of the downtrending Gann angle at 1.0915.
If buyers can overcome 1.0915 then look for the rally to extend into 1.0937 to 1.0974. Watch for sellers to return on a test of this zone.
A sustained move under 1.0858 will signal the presence of sellers. This should lead to a quick test of the 50% level at 1.0852.
The 50% level is a potential trigger point for an acceleration into a pair of uptrending Gann angles at 1.0818 and 1.0798. The latter is the last potential support angle before the 1.0778 main bottom.
This article was originally posted on FX Empire