EUR/USD Forex Technical Analysis – Reaction to .9714 Sets the Tone Ahead of Fed Minutes, US PPI Data


The Euro is inching lower early Wednesday after a higher close the previous session. The move followed four straight days of losses. Despite yesterday’s small gain, the single-currency remained within striking distance of the 20-year low touched on September 26.

In domestic news, the Euro Zone is expected to release data on Industrial Production at 09:00 GMT. The report is forecast to show a gain of 0.6%. This would be a strong improvement from the previously reported -2.3%.

At 02:46 GMT, the EUR/USD is trading .9686, down 0.0018 or -0.19%. On Tuesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $89.60, down $0.04 or -0.04%.

Euro traders are also bracing for the release of the minutes from the Federal Reserve’s September meeting at 18:00 GMT. While Fed Chairman Jerome Powell has acknowledged that aggressive interest rate increases could be painful, the central bank will continue to charge forward in its fight to lower inflation.

Investors are also looking forward to the September producer price index, a gauge of final-demand wholesale prices, due to be released by the Bureau of Labor Statistics on Wednesday at 12:30 GMT. Economists surveyed by Dow Jones are expecting headline PPI to increase 0.2%, after declining 0.1% in the previous month.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, since the formation of a closing price reversal bottom on September 28, momentum has been trending higher.

A trade through .9999 will change the main trend to up. A move through .9537 will negate the reversal bottom and signal a resumption of the downtrend.

The short-term range is .9537 to .9999. The EUR/USD is currently trading on the weak side of its retracement zone at .9714 to .9768, making it resistance.

The intermediate range is 1.0198 to .9537. Its 50% level at .9868 is additional resistance.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term Fibonacci level at .9714 is likely to determine the direction of the EUR/USD on Wednesday.

Bearish Scenario

A sustained move under the short-term Fibonacci level at .9714 will indicate the presence of sellers. Taking out this week’s low at .9673 will indicate the selling pressure is getting stronger. If this creates enough downside momentum, we could see an acceleration into the nearest support at .9537.

Bullish Scenario

A sustained move over .9714 will signal the presence of buyers. Look for a quick short-covering rally in the short-term 50% level if this generates enough upside momentum. Sellers could come in on the first test of this level, but overcoming it could trigger an acceleration to the upside.


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