The Euro is down sharply but off its lows on Monday as a wave of risk aversion swept global markets, increasing the U.S. Dollar’s appeal as a safe-haven asset. Meanwhile, Euro traders shrugged off French President Emmanuel Macron’s comfortable election victory over far-right rival Marine Le Pen. Additionally, the latest positioning data for the week-ending April 22 showed hedge funds trimmed their long Euro bets.
At 11:33 GMT, the EUR/USD is trading 1.07384, down 0.0060 or -0.56%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $99.98, down $0.43 or -0.43%. It’s expected to open lower when the U.S. cash stock market resumes trading at 13:30 GMT.
The longer-term outlook for the EUR/USD remains under the control of the U.S. Federal Reserve and the European Central Bank (ECB).
Hawkish comments by various policymakers last week also raised the risks of aggressive policy tightening by global central banks. Money markets expect the Fed to raise interest rates by a half a point at the next two meetings and the European Central Bank to raise interest rates by 25 basis points in July.
Morgan Stanley Issues Bleak Growth Outlook for Euro Zone Economy
In economic news, Morgan Stanley said on Monday it had revised down its economic growth forecasts for the Euro area this year and the next, anticipating a meaningful slowdown in economic growth in the second half of this year.
The investment bank said that while the Euro area economy had proved resilient, it faced weakness ahead with energy flows from Russia likely to be significantly reduced and headwinds from China where strict measures to contain COVID-19 are weighing on growth there.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through the intraday low at 1.0707 will signal a resumption of the downtrend. A move through 1.0936 will change the main trend to up.
The minor range is 1.0936 to 1.0707. Its retracement zone at 1.0821 to 1.0849 is the nearest resistance zone.
Daily Swing Chart Technical Forecast
The direction of the EUR/USD into the close on Monday is likely to be determined by trader reaction to 1.0799.
Bearish Scenario
A sustained move under 1.0799 will indicate the presence of sellers. Taking out the intraday low will indicate the selling pressure is getting stronger. This could trigger an extension of the break into the March 23, 2020 main bottom at 1.0636.
Bullish Scenario
A sustained move over 1.0799 will signal the presence of buyers. The first upside target is a minor retracement zone at 1.0821 to 1.0849.
Since the main trend is down, sellers are likely to re-emerge following a test of 1.0821 to 1.0849. Taking out the upper level, however, could trigger an acceleration into the resistance cluster at 1.0936 to 1.0946.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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