EUR/USD Mid-Session Technical Analysis for August 28, 2018

The Euro is trading higher shortly after the U.S. opening. The single currency continues to be supported by an easing of tensions in Turkey, which basically launched the current rally, end of the month position-squaring, dovish commentary from Fed Chair Powell on Friday and the announcement of a new trade deal between the U.S. and Mexico.

At 1200 GMT, the EUR/USD is trading 1.1717, up 0.0038 or +0.33%.

The news over Turkey triggered the initial short-covering rally. A weaker U.S. Dollar is fueling the rest of the move. The lifting of dollar hedges placed as protection during the trade dispute between the U.S. and Mexico is helping to drive the Euro higher. Finally, Powell’s comments on Friday suggested the Fed may be nearing neutrality.

Daily Technical Analysis

The main trend is up according to the daily swing chart. If the upside momentum continues then we could see a test of a pair of tops at 1.1747 and 1.1751.

The main trend is safe right now, but the nine day rally has put the EUR/USD in the window of time for a closing price reversal top. This wouldn’t change the main trend to down, but it could lead to a 2 to 3 day correction.

The minor trend is also up. A trade through 1.1530 will change the minor trend to down. This will also shift momentum to the downside.

Daily Technical Forecast

Based on the early trade, the direction of the EUR/USD is likely to be determined by trader reaction to the downtrending Gann angle at 1.1697.

A sustained move over 1.1697 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential rally into 1.1747 and 1.1751. Taking out these tops will reaffirm the uptrend.

A sustained move under 1.1697 will signal the presence of sellers. This could lead to a retest of the steep uptrending Gann angle at 1.1661. This angle provided support earlier today and has guided the EUR/USD higher since the bottom at 1.1301 on August 15, or 9 trading sessions.

We could see a technical bounce on the first test of 1.1661. If it fails then look for a test of the downtrending Gann angle at 1.1647. This angle is the trigger point for a potential acceleration to the downside with the next target the Fibonacci level at 1.1577.