EUR/USD Mid-Session Technical Analysis for August 21, 2020

The Euro is trading lower against the U.S. Dollar on Friday after giving up earlier gains. As an August batch of business surveys pointed to a stuttering economic recovery.

Flash Euro Zone manufacturing and services purchasing managers index (PMI) numbers for August were worse than expected. IHS Markit’s flash Composite Purchasing Managers’ Index, seen as a good gauge of economic health, sank to 51.6 from July’s final reading of 54.9.

At 13:20 GMT, the EUR/USD is trading 1.1785, down 0.0076 or -0.64%.

Daily Swing Chart Technical Analysis

The main trend is up but momentum has shifted to the downside. A trade through 1.1711 will change the main trend to down. A move through 1.1966 will signal a resumption of the uptrend.

The minor trend is down. It changed to down earlier today when sellers took out the minor bottom at 1.1802. This shifted momentum to the downside. The new minor top is 1.1883.

The first minor range is 1.1696 to 1.1966. Its 50% level at 1.1831 is new resistance.

The second minor range is 1.1371 to 1.1966. If the main trend changes to down then look for the selling to further extend into its retracement zone at 1.1668 to 1.1598.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1785, the direction of the EUR/USD today is likely to be determined by trader reaction to the first minor 50% level at 1.1831.

Bearish Scenario

A sustained move under 1.1831 will indicate the presence of sellers. With the momentum trending lower, sellers may try to drive the EUR/USD into the main bottom at 1.1711. If this level fails then the main trend will change to down.

Bullish Scenario

A sustained move over 1.1831 will signal the return of buyers. It will also indicate that the initial weakness was fueled by sell stops rather than new sellers. If the buying is strong enough to take out the intraday high at 1.1883 then momentum will shift to the upside.

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