EUR/USD Mid-Session Technical Analysis for August 25, 2020

The Euro is trading higher against the U.S. Dollar on Tuesday, essentially reversing yesterday’s price action. Additionally, today’s price range nearly matches Monday’s range. This type of trading tends to suggest investor indecision.

The relatively low volatility and volume also reflects an end of summer trading pattern, where many of the major players in the U.S. and Europe head to the sidelines to enjoy the last two weeks of summer vacation. Not to worry, however, as the trade does pick up again after the U.S. Labor Day holiday and at just about the time of the first European Central Bank policy meeting in two months.

At 11:44 GMT, the EUR/USD is trading 1.1817, up 0.0030 or +0.26%.

Additionally, we could be looking at a mostly sideways trade until Fed Chairman Jerome Powell delivers the keynote speech Thursday during a virtual version of the Fed’s annual Jackson Hole, Wyoming central bankers’ conference.

Powell is expected to outline what could be the central bank’s most active efforts ever to spur inflation back to a healthy level.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1966 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.1711.

The minor trend is also up. The minor trend will change to down on a move through 1.1754. This will also shift momentum to the downside. A trade through 1.1883 will take out a minor top, which could signal the return of buyers.

The direction of the EUR/USD the past several sessions has been controlled by a pair of 50% levels at 1.1831 and 1.1860.

If the main trend changes to down then the retracement zone at 1.1668 to 1.1598 will become the primary downside target.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to the pair of 50% levels at 1.1831 and 1.1860.

Bearish Scenario

A sustained move under 1.1831 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for the selling to possibly extend into 1.1754 then 1.1711.

Bullish Scenario

A sustained move over 1.1860 will signal the presence of buyers. The next target is 1.1883. This is a potential trigger point for an acceleration to the upside with the next major targets coming in at 1.1966 and 1.1998.

Side Notes

Keep in mind that breakout moves will have limited success if the volume remains below average. In the absence of any major headlines, the best advice today is to avoid getting caught in break out traps.