The EURUSD bottomed in the early European session 1.12658. That was near the high of a swing area between 1.12595 and 1.12658. The subsequent spiked to the upside over the next four hours peaked near 1.1323. That was right around the swing high prices from Thursday and Friday. It is also near the 61.8% retracement of the move down from the November 30 high.
After stalled against that level, the price has rotated all the way back down to retest the low price from earlier in the day and also the swing area between 1.12595 and 1.12658. The new low for the day has reached 1.1264. The current price is trading just above that level at 1.1266.
What now?
Traders have at least nine different swing levels within the aforementioned swing area (see red numbered circles). Risk focused buyers can put a tilt in the water once again near that level with a stop below. Those traders looking to benefit from more downside on a break one see the low end of the swing area be broken and stay broken. That would open the door for a rotation back down toward the swing low from November 30 at 1.1233 and the swing low from December 7 at 1.12266.
Should the price bounce, the 1.1273 to 1.12778 swing area would give buyers some comfort that a low has been made.
The USD has been moving to the upside as traders will be preparing for a tighter Fed, higher rates. The FOMC rate decision is tomorrow at 2 PM ET. That 8:30 AM US retail sales will be released. The Fed is expected to double the taper from $15 billion per month to $30 billion per month. Eyes will also be on the expectations for the short term rate path for Fed funds. In September, the expectations for 2022 was between zero and one rate hike. That will be shifted higher with the majority likely expecting two rate hikes in 2022.
