The Euro hit its lowest level since April 6 against the U.S. Dollar on Wednesday after German data raised doubts about the strength of the economic recovery, while the U.S. currency awaited the minutes from the last Federal Reserve policy meeting.
Investor sentiment in Germany, the Euro Zones biggest economy, fell sharply in July, though it remained at a very high level, the ZEW economic research Institute reported.
Separate data showed orders for German-made goods posted their sharpest slump in May since the first lockdown in 2020, hurt by weaker demand from countries outside the Euro Zone.
At 13:45 GMT, the EUR/USD is trading 1.1806, down 0.0016 or -0.13%.
Investors will be listening for more clues on the direction of the Federal Reserves monetary policy when it releases its latest meeting minutes Wednesday at 18:00 GMT.
The Fed‘s minutes are expected to be dovish with the central bank looking for progress in the labor market and not worried that recent inflation will become a persistent trend. Slowing down the bond buying would be the Fed’s first major retreat from the easy policies it put in place when the economy shut down last year.
The main trend is down according to the daily swing chart. A trade through the new main top at 1.1895 will change the main trend to up.
The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to 1.1822.
Bearish Scenario
A sustained move under 1.1822 will indicate the presence of sellers. Taking out the intraday low at 1.1800 will indicate the selling pressure is getting stronger.
The daily chart shows there is plenty of room to the downside with the March 31 main bottom at 1.1704 the primary downside target.
Bullish Scenario
A sustained move over 1.1822 will signal the presence of buyers. The first upside target is a minor pivot at 1.1848, followed by the main top at 1.1895. Taking out this level will change the main trend to up.
Side Notes
A close over 1.1822 will form a potentially bullish closing price reversal bottom. If confirmed, this could trigger the start of a 2 to 3 day correction.
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