EUR/USD Mid-Session Technical Analysis for August 1, 2019

The Euro is trading lower against the U.S. Dollar on Thursday, following through to the downside after a steep sell-off the previous session. The selling pressure is being driven by a combination of a less-dovish Federal Reserve and expectations of stimulus from the European Central Bank in September.

Yesterday, the Fed cut its benchmark interest rate 25-basis points as widely expected, but Fed Chair Jerome Powell surprised traders when he characterized the rate cut as “a mid-cycle adjustment to policy”. The signaled to traders that further rate cuts were not imminent.

Treasury yields whipsawed on the news, but short-term yields finished higher. This made the U.S. Dollar a more attractive asset, driving down the Euro.

At 11:44 GMT, the EUR/USD is trading 1.1039, down 0.0038 or -0.34%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The next downside target is the May 11, 2017 main bottom at 1.0838.

The main trend will change to up on a trade through 1.1282. This is highly unlikely today. The prolonged move in terms of price and time, however, has put the EUR/USD in the window of time for a closing price reversal bottom. This is one of the chart patterns that could stop the selling pressure.

The nearest major retracement level resistance is the long-term Fibonacci level at 1.1185.

Daily Technical Forecast

The EUR/USD is in a freefall early in the session. The nearest resistance is the downtrending Gann angle at 1.1102. This angle is currently guiding the EUR/USD lower. Sellers could come in on a test of this angle, but if it fails as resistance then look for the short-covering to possibly extend into the next downtrending Gann angle at 1.1143.

Now that the EUR/USD has posted a new lower-low, the key level to watch the rest of the session is yesterday’s close at 1.1077.

A move under 1.1077 will help sustain the bearish tone.

Overtaking 1.1077 will put the EUR/USD in a position to post a potentially bullish closing price reversal bottom. This chart pattern won’t change the trend, but it could lead to a 2 to 3 counter-trend rally.