EUR/USD Mid-Session Technical Analysis for August 6, 2020

The Euro is edging lower against the U.S. Dollar on Thursday as risk appetite faded ahead of today’s U.S. weekly initial jobless claims report and as Washington policymakers remained unable to agree on a new financial aid package.

Risk appetite was boosted on Wednesday with ISM data from the Euro Zone showing the economy was starting to expand, and U.S. new service industry orders jumping to a record high.

At 12:12 GMT, the EUR/USD is trading 1.1842, down 0.0023 or -0.19%.

“Today’s jobless claims report will be closely watched:  should initial claims fail to re-enter a downward pattern, the dollar may be set for another leg lower,” wrote ING strategists. This could spike the EUR/USD higher. Today’s weekly unemployment claims report is expected to come in at 1410K versus last week’s 1434K, a slight improvement.

Meanwhile, investors continue to wait for lawmakers to agree on a new package of government support for the United States. With no sign of an agreement in sight, Republicans and Democrats remained trillions of dollars apart.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the early price action suggests a potentially bearish closing price reversal top may be forming. This won’t change the main trend to down, but it could shift momentum to the downside.

A trade through the intraday high at 1.1916 will signal a resumption of the uptrend. The main trend is safe for now. It will change on a trade through 1.1185. However, there is room for a normal 50% to 61.8% correction of the more than month-long rally.

The minor trend is also up according to the daily swing chart. It changes to down on a trade through 1.1696.

The minor range is 1.1696 to 1.1916. Its 50% level at 1.1806 is potential support. However, it is also the trigger point for an acceleration to the downside.

The next support level and the first key downside target zone is 1.1644 to 1.1579.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1842, the direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1864.

Bullish Scenario

A sustained move over 1.1864 will indicate the presence of buyers. This could trigger a retest of 1.1916. Taking out this level could trigger a rally into the May 14, 2018 main top at 1.1998.

Bearish Scenario

A sustained move under 1.1864 will signal the presence of sellers. This could trigger a break into the pivot at 1.1806. If this level fails as support then look for the selling to possibly extend into the minor bottom at 1.1696.

A close under 1.1864 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

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