The Euro is trading lower late in the session on Monday after the U.S. Dollar rebounded from its lowest level in 2-1/2 years as broad risk sentiment soured again and shares on Wall Street retreated. Investors took profits in the single-currency and sought protection in the safe-haven greenback on concerns over weakening U.S. economic data and the absence of any traction on another stimulus package.
At 20:19 GMT, the EUR/USD is trading 1.1933, down 0.0027 or -0.23%.
Sellers emerged after the Euro hit a three-month high of 1.20. The European Central Bank (ECB) signaled earlier this year it was carefully monitoring the Euro-Dollar exchange rate. This made investors reluctant to chance it higher.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, but the price action late in the session indicates the EUR/USD may be forming a potentially bearish closing price reversal top. This won’t change the trend to down, but if confirmed, it could trigger the start of a 2 to 3 day pullback.
A trade through 1.2003 will signal a resumption of the uptrend, while a move through 1.1800 will change the main trend to down. Taking out the September 1 top at 1.2011 will reaffirm the uptrend.
The short-term range is 1.1800 to 1.2003. Its retracement zone at 1.1902 to 1.1878 is the first downside target.
The main range is 1.2011 to 1.1603. Its retracement zone at 1.1855 to 1.1807 is the main support. This zone is controlling the near-term direction of the EUR/USD.
A close under 1.1960 will form a closing price reversal top on the daily chart. This is a potentially bearish chart pattern. If confirmed, we could see a 2 to 3 day break, or a move into 1.1902 to 1.1878. Since the main trend is up, buyers could come in on a test of this area.
If 1.1878 fails to hold then look for the selling to possibly extend into 1.1855 to 1.1807. Once again, buyers could return.
The biggest concern for bullish EUR/USD traders should be a break under 1.1807. The trend will change to down on a move through the 1.1800 main bottom.