The EURUSD is trading higher on the day, and once again the trading range is very modest. The trading pair is trading in a 42 range versus a 72 PIP average of the last 22 trading days. Yesterday the trading range was about 54 pips. On Monday the trading range was around 47 pips. So there is a pattern of uncertainty/up and down price action, that is pitting buyers and sellers against each other with little in the way of a clear winner.
The high was in the first hour of trading on Monday near 1.1461 . The low was on Tuesday at 1.1396. The 65 pip range for the week so far is very narrow. The current price is trading between those extremes at 1.1433. Knowing the ranges narrow and expecting a extension is a benefit to traders looking in one direction or the other.
Having said that, the technicals also come in play in helping determine the bias from the nuances of the price action.
Looking at the hourly chart, the low price today stalled just short of the lows from yesterday and also the 38.2% retracement of the last spike higher from the ECB meeting day last week. That retracement comes in at 1.1400, a nice natural support level. As mentioned the low for the week came in at 1.1396. There are other lows yesterday near the 1.1400 natural support level . The low today came in at 1.14018. Buyers leaned against the support and pushed higher (albeit modestly).
The move to the upside has taken the price back above its 100 day moving average at 1.14196, and also its rising 100 hour moving average at 1.14287 (see blue lines in the chart above). Traders looking for technical clues to the upside can lean against those moving average levels in hopes that support buyers hold, and pushed the price higher. The high from Monday midday came in at 1.1458. A swing high from Friday in the New York session came in at 1.14634. The high price from last week stalled at 1.14832. Recall that high was matched by other highs in January at 1.1481 and 1.1482 (a triple top between 1.1481 and 1.1483).
So if the bias it's the upside, above the 100 day and 100 hour moving average, and the range for the week is to be extended to the upside, risk can be defined against those moving average levels.
What would hurt that technical trade would be a move back below those moving averages. At that point, traders will look toward a break of the 38.2% retracement and the low for the week at 1.1395.
Fundamentally, yesterday Bank of France's governor Villeroy said that the markets have overreacted to Lagarde's comments last week after the ECB meeting. Today, ECBs Nagel gave it to March 1 for inflation to come down before voting for normalization. The ECB sits on a ledge and so does the EURUSD.
