EUR/USD Edging Higher Amid Rise in Euro Zone Consumer Confidence

The Euro is holding on to some of its earlier gains against the U.S. Dollar after Euro Zone consumer confidence rose by 1.7 points in December from the November number, figures released on Tuesday showed.

The European Commission said a flash estimate showed Euro Zone consumer morale improved to -22.2 this month from -23.9 in November. Economists polled by Reuters had expected a rise to -22.0.

In the European Union as a whole, consumer sentiment rose by 1.4 points to -24.4.

At 17:00 GMT, the EUR/USD is trading 1.0630, up 0.0023 or +0.22%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $98.06, up $0.18 or +0.18%.

Earlier in the session, the common currency rose after Euro Zone government bond yields jumped, echoing weakness in the Japanese market, where yields hit a seven-year high after the Bank of Japan (BOJ) surprised investors by loosening some of its strict controls over long-term interest rates.

The BOJ kept broad policy settings unchanged, but widened the allowable band for long-term yields to 50 basis points either side of that, from 25 basis points previously.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since December 15.

A trade through 1.0736 will signal a resumption of the uptrend. A move through 1.0443 will change the main trend to down.

The nearest support is a minor pivot at 1.0590, followed by a short-term 50% level at 1.0513. The closest resistance is 1.0656. The major resistance is a price cluster at 1.0936 – 1.0943.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at 1.0590 is likely to determine the direction of the EUR/USD into the close on Tuesday.

Bullish Scenario

A sustained move over 1.0590 will indicate the presence of buyers. If this generates enough upside momentum then look for a surge into the minor resistance at 1.0656. Overcoming this level could create the upside momentum needed to challenge the last main top at 1.0736.

Bearish Scenario

A sustained move under 1.0590 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to extend into 1.0513. This is the last potential support before the 1.0443 main bottom. If this level fails then the main trend will change to down.