The Euro is trading higher against the U.S. Dollar on Tuesday after posting a dramatic reversal to the upside earlier in the session. Traders aren’t sure what caused the volatile move with some saying it was in reaction to positive data from the World Health Organization (WHO) regarding treatment for COVID-19.
Others are saying the move was fueled by a report that showed U.S. consumer prices in April took their biggest drop in history going back to at least 1957 as the economy reeled from restrictions imposed to control the coronavirus.
The Bureau of Labor Statistics reported Tuesday that the CPI excluding food and energy prices slumped 0.4%, the steepest monthly drop since records have been kept.
At 13:40 GMT, the EUR/USD is trading 1.0872, up 0.0057 or +0.52%.
Based on the early price action and the current price at 1.0872, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at 1.0892.
Bullish Scenario
A sustained move over 1.0892 will indicate the buying is getting stronger. This may create the upside momentum needed to challenge the next 50% level at 1.0937.
Bearish Scenario
A sustained move under 1.0892 will signal the presence of sellers. This could lead to a retest of the main Fibonacci level at 1.0831.
Side Notes
The intraday reversal is impressive by it will be meaningless if there is no follow-through to the upside. Additionally, holding inside 1.0892 to 1.0831 will indicate investor indecision.
Others are saying the move was fueled by a report that showed U.S. consumer prices in April took their biggest drop in history going back to at least 1957 as the economy reeled from restrictions imposed to control the coronavirus.
The Bureau of Labor Statistics reported Tuesday that the CPI excluding food and energy prices slumped 0.4%, the steepest monthly drop since records have been kept.
At 13:40 GMT, the EUR/USD is trading 1.0872, up 0.0057 or +0.52%.
Based on the early price action and the current price at 1.0872, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at 1.0892.
Bullish Scenario
A sustained move over 1.0892 will indicate the buying is getting stronger. This may create the upside momentum needed to challenge the next 50% level at 1.0937.
Bearish Scenario
A sustained move under 1.0892 will signal the presence of sellers. This could lead to a retest of the main Fibonacci level at 1.0831.
Side Notes
The intraday reversal is impressive by it will be meaningless if there is no follow-through to the upside. Additionally, holding inside 1.0892 to 1.0831 will indicate investor indecision.
