EUR/USD Mid-Session Technical Analysis for August 31, 2021

The Euro is trading higher at the mid-session but well off its highs after the U.S. Dollar strengthened following a test of a more-than-three week low against a basket of major currencies on Tuesday.

The two-sided price action is probably being fueled by a number of factors including firmer Treasury yields, end of the month position-squaring in several of the major currencies and relatively low volume ahead of Friday’s U.S. Non-Farm Payrolls report that could influence the timing of the Fed’s tapering plan.

At 17:28 GMT, the EUR/USD is trading 1.1806, up 0.0009 or +0.08%.

In economic news, data released earlier in the day showed Euro Zone inflation surged to a 10-year-high this month, with consumer prices in the 19 countries sharing the Euro up by 3%.

In the U.S., the dollar briefly pared some of its losses after the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas showed U.S. single-family homes prices rose in June from the prior year at the fastest pace on record. In other U.S. news, the Chicago PMI for August came in weaker than expected and the Conference Board’s reading for consumer confidence fell short of expectations.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at 1.1845 will signal a resumption of the uptrend. A move through 1.1664 will change the main trend to down.

The minor trend is also up. A trade through 1.1735 will change the minor trend to down. This will also shift momentum to the downside.

Earlier today, the EUR/USD found resistance at 1.1845 inside the 1.1820 to 1.1856 retracement zone.

The new minor range is 1.1664 to 1.1845. Its retracement zone at 1.1755 to 1.1733 is the new downside target.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Tuesday will be determined by trader reaction to 1.1797.

Bullish Scenario

A sustained move over 1.1797 will indicate the presence of buyers. Overtaking the 50% level at 1.1820 will indicate the buying is getting stronger. This could trigger a further rally into the intraday high at 1.1845, followed by the Fibonacci level at 1.1856.

Bearish Scenario

A sustained move under 1.1797 will signal the presence of sellers. If this continues to generate enough downside momentum then look for the selling to possibly extend into the minor retracement zone at 1.1755 to 1.1733 over the short-run.

Side Notes

Due to the 7 to 10 day rule, a close under 1.1797 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction into at least 1.1755 to 1.1733.