1.1900 Looms Large For The EUR/USD

The USD has continued the recent positive momentum throughout Monday’s forex session. Gains against the Euro, Swiss franc, and Australian dollar have been the highlights. Tight trade against the British pound and Canadian dollar have been the sole weak spots for the Greenback.

Later today, several FOMC members are scheduled to speak. Comments from Thomas Barkin, Charles Evans, and Steven Kaplan are due out in coming hours. Each is likely to address the current state of the U.S. economy as well as the potential impacts of sub-4% unemployment and 2% inflation.

Remember, the FOMC voted unanimously (8-0) to hold rates static last Wednesday. Amid talk of a June rate hike being a certainty, be on the lookout for an aggressively hawkish tone toward the USD.

EUR/USD Technicals

Bears have once again dominated the action in the EUR/USD, driving price beneath the 1.1900 handle.

The daily chart is setting up in accordance with the classic “L” formation typical of trending markets. After the steep downtrend beginning in mid-April, the EUR/USD has begun trading sideways between 1.2000 and 1.1900.

Three levels to watch as the trading week unfolds:

• Resistance(1): Psyche Level, 1.20000
• Support(1): Psyche Level, 1.1900
• Support(2): 38% Macro Retracement, 1.1708

Overview: There is growing optimism toward the Greenback, but the long-term uptrend in the EUR/USD remains technically valid. The key 38% macro retracement of January 2017’s low (1.034) to February 2018’s high (1.2554) is a critical level for this market. Until 1.1708 is taken out, one has to respect the aggregate uptrend.

At press time, price is rotating near the 1.1925 level. I will be on the lookout for more short-term bearish action as the week unfolds. FED Chair Jerome Powell is due to speak tomorrow afternoon at 3:15 PM EST. Be on the lookout for enhanced volatility during his commentary. Any statements regarding the FED’s 2% target being achieved and the chance of four rate hikes for 2018 will bring added participation to this market.