EUR/USD Mid-Session Technical Analysis for August 7, 2019

The Euro is trading lower on Wednesday, but inside yesterday’s range. The price action indicates investor indecision and impending volatility. Falling Treasury yields are underpinning prices, while weaker German Bund yields are keeping a lid on prices.

Traders are paying close attention to yields today because earlier in the session, the Reserve Bank of New Zealand shocked the Forex markets with a 50-basis point rate cut. This aggressiveness may spread to the other central banks.

At this time, Euro traders are pricing in a 0.10% rate cut by the European Central Bank as well as another form of stimulus like quantitative easing. Investors are also pricing in a 100% chance of a 25-basis point rate hike by the Federal Reserve in September.

At 12:26 GMT, the EUR/USD is trading 1.1194, down 0.0008 or -0.07%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at 1.1027 on August 1.

A trade through 1.1282 will change the main trend to up. Taking out 1.1286 will indicate the buying is getting stronger.

Yesterday’s closing price reversal top at 1.1250 indicates that sellers are defending the trend.

The main range is 1.1413 to 1.1027. Its retracement zone at 1.1220 to 1.1265 is resistance. This zone stopped the rally on Tuesday at 1.1250.

Support is the longer-term Fibonacci level at 1.1185.

The short-term range is 1.1027 to 1.1250. Its retracement zone at 1.1139 to 1.1112 is the next potential downside target.

Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the uptrending Gann angle at 1.1187 and the Fibonacci level at 1.1185.

Bullish Scenario

A sustained move over 1.1187 will indicate the presence of counter-trend buyers. The first upside targets are a downtrending Gann angle at 1.1217 and a 50% level at 1.1220.

Overtaking 1.1220 could drive the EUR/USD into 1.1250, followed by a downtrending Gann angle at 1.1258 and a Fibonacci level at 1.1265.

Bearish Scenario

A sustained move under 1.1185 will signal the presence of sellers. This could trigger an acceleration to the downside with the next target a short-term retracement zone at 1.1139 to 1.1112.

Overview

Essentially, we’re looking for an upside bias to develop on a sustained move over 1.1220, and a downside bias to develop on a sustained move under 1.1185.