The Euro is edging lower on Tuesday as investors moved into the U.S. Dollar ahead of U.S. inflation data due later in the week. The price action suggests investors are still sitting on the fence ahead of next week’s Federal Reserve monetary policy meeting even after last Friday’s softer-than-expected U.S. jobs report somewhat dampened concerns over early tapering of the central bank’s bond-buying stimulus.

At 11:54 GMT, the EUR/USD is trading 1.2178, down 0.0012 or -0.10%.

Euro Zone Economic Dip Milder than Expected in First Quarter

The Euro Zone economy contracted by much less than expected in the first quarter of the year, revised data from the EU’s statistics office showed, with a buildup of inventories and investment offset by reduced consumer spending, Reuters reported.

Eurostat said gross domestic product in the 19 countries sharing the Euro contracted 0.3% quarter-on-quarter for a 1.3% year-on-year decline. These compared with estimates three weeks ago of respectively -0.6% and -1.8%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the closing price reversal bottom on June 4.

A trade through 1.2254 will change the main trend to up. A move through 1.2104 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor range is 1.2266 to 1.2104. The EUR/USD is currently straddling its 50% level at 1.2185.

The first short-term range is 1.2052 to 1.2266. Its 50% level at 1.2159 is potential support.

The second short-term range is 1.1986 to 1.2266. Its 50% level at 1.2125 is another potential support level.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to 1.2185.

Bullish Scenario

A sustained move over 1.2185 will indicate the presence of buyers. If this move can create enough upside momentum, we could see a test of 1.2254 over the short-term.

Bearish Scenario

A sustained move under 1.2185 will signal the presence of sellers. The first downside target is 1.2159. Taking out this level could trigger a dip into 1.2125. If this level fails then look for a retest of the minor bottom at 1.2104. This price is a potential trigger point for an acceleration to the downside.