EUR/USD Mid-Session Technical Analysis for August 18, 2020

The Euro is trading higher against the U.S. Dollar while hovering just below its two-year high. Investors are buying the Euro because of the perceived weakness in the U.S. economy.

The greenback extended its new downswing on Tuesday on a combined hit of lower Treasury yields, soft U.S. economic data and a drop in safe-haven demand.

Investors who bought the U.S. Dollar recently as safe-haven protection against the possibility the U.S. and China would end their Phase 1 trade deal are now being encouraged to liquidate those positions due to a delay in the review of the deal this week. That left the agreement standing and reinforced a belief the trade relationship can hold even amidst conflict on multiple other fronts.

At 11:43 GMT, the EUR/USD is trading 1.1904, up 0.0032 or +0.27%.

Real money and leveraged investors preferred to express their negative view on the dollar via the most traded currency pair in the world – Euro/Dollar – pushing Euro Longs to a new record high in the week to August 11, latest CFTC data showed.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1916 will reaffirm the uptrend. The main trend will change to down on a trade through the last swing bottom at 1.1711.

The minor range is 1.1916 to 1.1711. Its retracement zone at 1.1838 to 1.1813 is support. This zone is also controlling the near-term direction of the Forex pair.

The short-term range is 1.1371 to 1.1916. If the main trend changes to down then look for a test of its retracement zone at 1.1644 to 1.1579.

Daily Swing Chart Technical Forecast

Look for the upside bias to continue as long as the EUR/USD holds above the minor retracement zone at 1.1838 to 1.1813.

If the move is able to create enough upside momentum then look for a test of the main top at 1.1916. Taking out this level could trigger a surge into the May 14, 2018 main top at 1.1998.

The first sign of weakness will be a break under 1.1838. Crossing to the weak side of the 50% level at 1.1813 will indicate the selling pressure is getting stronger. If this creates enough downside momentum then look for the selling to possibly extend into the main bottom at 1.1711.