Euro Forming Potentially Bearish Closing Price Reversal Top

The Euro is edging lower on Friday after giving back earlier gains. The move is being attributed to a turnaround in the U.S. Dollar, following the release of several weaker-than-expected U.S. economic reports. Although some are blaming the quick reversal on position-squaring and profit-taking on the single-currency’s weakness, following four days of impressive gains.

At 14:47 GMT, the EUR/USD is trading 1.1440, down 0.0015 or -0.13%. The high of the session is 1.1483. Additionally, the Invesco CurrencyShares Euro Trust ETF (FXE) is at $106.27, down $0.15 or -0.14%.

In economic news, U.S. retail sales tumbled in December as Americans struggled with shortages of goods and an explosion of COVID-19 infections, but that will likely not change expectations that economic growth accelerated in the fourth quarter.

Retail Sales dropped 1.9% last month after rising 0.2% in November, the Commerce Department said on Friday. Economists polled by Reuters had forecast retail sales unchanged. Estimates ranged from as low as a drop of 2.0% to as high as a 0.8% increase.

In addition to the weak retail sales report, Import Prices fell as well as Industrial Production and Capacity Utilization.

In other news, Euro Zone inflation will fall from a record high this year and the European Central Bank is ready to take any measures necessary to get it down to its 2% target, ECB President Christine Lagarde said on Friday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the EUR/USD is forming an outside move reversal that could be signaling a shift in momentum to down.

A trade through 1.1483 will indicate a resumption of the uptrend. A move through 1.1272 will change the main trend to down.

On the upside, the major resistance is a retracement zone at 1.1547 to 1.1633. On the downside, the nearest target and potential support is 1.1378.

The EUR/USD is currently straddling a pivot at 1.1439. This could determine the intraday price action.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Friday will likely be determined by trader reaction to 1.1455 and 1.1439.

Bullish Scenario

A sustained move over 1.1455 will indicate the presence of buyers. If this generates enough upside momentum then look for a retest of the intraday high at 1.1483.

Bearish Scenario

A sustained move under 1.1455 will be the first sign of weakness, while a sustained move under 1.1439 could trigger an acceleration to the downside with 1.1378 the short-term target.

Side Notes

A close under 1.1439 will form a potentially bearish closing price reversal top. If confirmed on Monday, this could trigger the start of a 2 to 3 day correction.