The Euro is trading higher against the U.S. Dollar on Thursday as investors dumped risky positions in currency markets in a broad-based unwinding by some hedge funds.
A weakness in mega cap U.S. technology stocks after the release of the Fed minutes widened to a broader selloff in Asian stocks and renewed demand for the safe-haven appeal of government debt and safe-haven currencies.
While the dollar initially rose in early London trading, the Euro jumped across the board as the selloff gathered pace as some hedge funds unwound some of their large bets against the single currency versus some other majors.
At 16:37 GMT, the EUR/USD is trading 1.1839, up 0.0048 or +0.41%.
While minutes of the U.S. Federal Reserves June policy meeting confirming it was moving towards tapering its asset purchases as soon as this year were widely blamed for the selloff, some traders saw an extension of the unwinding of the reflation theme seen in the global bond markets this week.
The main trend is down according to the daily swing chart. A trade through 1.1895 will change the main trend to up. Taking out 1.1782 will signal a resumption of the downtrend.
The minor range is 1.1895 to 1.1782. Its 50% level is 1.1839.
The short-term range is 1.1975 to 1.1782. Its retracement zone at 1.1879 to 1.1901 is the next upside target. The main top falls inside this range.
The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1839.
A sustained move under 1.1839 will indicate the presence of sellers. If this move creates enough downside momentum then look for a retest of 1.1782. Taking out this level could trigger an acceleration into the March 31 main bottom at 1.1704.
A sustained move over 1.1839 will signal the presence of buyers. The first upside target is the short-term retracement zone at 1.1879 to 1.1091.
Taking out 1.1895 will change the main trend to up, but overtaking 1.1901 could trigger an acceleration to the upside with 1.1975 the next likely upside target.