The Euro is trading lower on Tuesday, pressured by firmer U.S. Treasury yields, which are helping to make the U.S. Dollar a more attractive investment. Essentially, the divergence between the less-dovish U.S. Federal Reserve and the dovish European Central Bank is driving down the Euro. Safe-haven demand for the dollar is also weighing on demand for the single-currency.
At 11:44 GMT, the EUR/USD is trading 1.1148, down 0.0017 or -0.15%.
The dollar is also being supported by stronger-than-expected U.S. economic data, which has dampened concerns over a U.S. recession and a Fed rate cut. Fed Chairman Powell also contributed to the lowering of the odds of a rate cut. In a speech late Monday, Powell did not provide any clear hints of a rate cut this year. He also said it was premature to make a judgment about the impact trade and tariff issues could have on monetary policy.
Additionally, general nervousness ahead of the May 23-26 European parliamentary election and lingering political turmoil in Italy is encouraging investors to cut their long Euro positions.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 1.1135 will reaffirm the downtrend. This could trigger a further break into the April 26 main bottom at 1.1112 and the May 30, 2017 main bottom at 1.1109.
On the upside, the nearest resistance is the long-term Fibonacci level at 1.1185. Overcoming this level could shift momentum to the upside.
Daily Technical Forecast
Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to an uptrending Gann angle at 1.1155.
A sustained move under 1.1155 will indicate the presence of sellers. The next target is the downtrending Gann angle at 1.1144. Crossing to the weak side of this angle should lead to a test of the uptrending Gann angle at 1.1133. This is the last potential support angle before the 1.1112 and 1.1109 main bottoms. These are the trigger points for an acceleration to the downside.
Overtaking and sustaining a rally over 1.1155 will signal the return of buyers. This will indicate the selling is getting weaker. If the buying increases then look for a near-term move into 1.1185.
This article was originally posted on FX Empire
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