EUR/USD Forex Technical Analysis – Weakens Under 1.1278, Strengthens Over 1.1295

The Euro is trading lower against the U.S. Dollar early Friday as a surge in new coronavirus cases and a U.S. Supreme Court ruling on President Donald Trump’s financial records encouraged investors to sell the higher-risk Euro and seek protection in the safe-haven U.S. Dollar.

The Euro fell from a one-month high on Thursday, producing a potentially bearish closing price reversal top in the process. The chart pattern could trigger the start of a 2 to 3 day correction.

At 06:02 GMT, the EUR/USD is trading 1.1271, down 0.0012 or -0.11%.

The dollar rally coincided with the Supreme Court ruling on Thursday that a New York prosecutor can obtain Trump’s financial records. But it did prevent, at least for now, the Democratic-led House of Representatives from obtaining the same records.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the formation of a closing price reversal top and its subsequent confirmation on Friday.

A trade through 1.1371 will negate the closing price reversal top and signal a resumption of the uptrend. A trade through 1.1185 will change the main trend to down.

The short-term range is 1.1422 to 1.1168. Its 50% level at 1.1295 is now resistance.

The minor range is 1.1185 to 1.1371. Its 50% level at 1.1278 is also resistance.

The intermediate range is 1.0871 to 1.1422. If the main trend changes to down then its retracement zone at 1.1146 to 1.1082 will become the primary downside target.

Daily Swing Chart Technical Forecast

Thursday’s closing price reversal top was confirmed on Friday when sellers took out yesterday’s low at 1.1280. Based on this price action and the current price at 1.1271, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the 50% level at 1.1278.

Bearish Scenario

A sustained move under 1.1278 will indicate the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor bottom at 1.1219, followed by the main bottom at 1.1185.

Bullish Scenario

A sustained move over 1.1278 will signal the presence of buyers. However, don’t expect the EUR/USD to strengthen unless buyers can overcome the next 50% level at 1.1295 with conviction.

For a look at all of today’s economic events, check out our economic calendar.