EUR/USD Mid-Session Technical Analysis for September 27, 2016

The EUR/USD is trading slightly lower at the mid-session. Greater demand for risky assets is helping to pressure the Euro since it is a funding currency.

The markets are responding to the U.S. presidential debates and based on their behavior it looks as if Democratic candidate Hillary Clinton did better than Republican candidate Donald Trump in a television debate.

The debates have to be talked about because they will affect market volatility until the general election the first week of volatility. The simple way to look at it is, Clinton is the frontrunner. We’ll see volatility to the upside if she wins the debates and volatility to the down side if Trump wins the debate.

The more confident the markets are in a Clinton victory, the greater the demand for risky assets such as stocks and higher-yielding currencies like the Aussie and lesser demand for the funding currencies like the Euro and Japanese Yen.

Today, investors will also get the opportunity to react to U.S. reports on housing, services and consumer confidence. However, I think the speech by FOMC Member Stanley Fischer could have the most impact on the market. He is an ally of Fed Chair Janet Yellen, but he has at times, offered hawkish comments which have fueled market volatility.

TECHNICAL ANALYSIS

Technically, the main trend is down according to the daily swing chart, but I have to say that momentum is to the upside and there is also an upside bias developing since the EUR/USD crossed to the strong side of the major 50% levels at 1.1168 and 1.1159.

The short-term range is 1.1327 to 1.1122. Its retracement zone at 1.1224 to 1.1249 is currently being tested. This zone could have a major impact on the near-term direction of the EUR/USD. Bearish traders are going to try to sell a rally into this zone in an effort to produce a potentially bearish secondary lower top. Bullish traders are going to try to take out this zone in an effort to solidify the 1.1122 main bottom.

FORECAST

THE EUR/USD HAS REACHED A CRITICAL RESISTANCE ANGLE ON THE DAILY CHART. IT COMES IN AT 1.1259. TRADER REACTION TO THIS ANGLE WILL TELL US WHETHER THE BUYING IS GETTING STRONGER OR THE SELLERS ARE REGAINING CONTROL.

A SUSTAINED MOVE OVER 1.1259 WILL INDICATE THE PRESENCE OF BUYERS. THIS COULD GENERATE ENOUGH UPSIDE MOMENTUM TO CHALLENGE THE NEAREST TARGET AT 1.1327.

A SUSTAINED MOVE UNDER 1.1259 WILL SIGNAL THE PRESENCE OF SELLERS. WE COULD SEE A LABORED BREAK BECAUSE OF THE SHORT-TERM FIB AT 1.1249 AND THE LONG-TERM UPTRENDING ANGLE AT 1.1245.

IF 1.1245 FAILS AS SUPPORT THEN LOOK FOR A SPIKE DOWN TO 1.1224. THE DAILY CHART OPENS UP UNDER 1.1224 WITH THE NEXT MAJOR TARGET COMING IN AT 1.1181.

TO KEEP IT SIMPLE, LOOK FOR A STRONG UPSIDE BIAS TO DEVELOP ON A SUSTAINED MOVE OVER 1.1259 AND A DOWNSIDE BIAS ON A SUSTAINED MOVE UNDER 1.1245.