EUR/USD Mid-Session Technical Analysis for December 17, 2021

The Euro is trading lower on Friday after failing to follow-through to the upside, following Thursday’s strong performance. Contributing to the single-currency’s weakness is a report that showed German business morale declined for a sixth straight month as Europe’s largest economy fells the effects of supply bottle necks and COVID-19 restrictions.

At 13:00 GMT, the EUR/USD is trading 1.1330, down 0.0002 or -0.02%. On Thursday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $105.41, up $0.44 or +0.42%.

The Ifo Institute said its business climate index fell to 94.7 in December from a revised 96.6 in November. A Reuters poll of analysts had pointed to a reading of 95.3.

On Thursday, the EUR/USD jumped to its highest level since November 30 after the European Central Bank said it would continue to cut its bond purchases. The news came less than 24-hours after the U.S. Federal Reserve announced a faster taper and three rate hikes in 2022, basically meeting expectations.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher.

A trade through 1.1383 will change the main trend to up. A move through 1.1222 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum.

The EUR/USD is trading on the strong side of a major Fibonacci level at 1.1291, making it support.

Even if the main trend changes to up, the EUR/USD could struggle to breakout with minor resistance levels lined up at 1.1397, 1.1439 and 1.1493. If the common currency can grind through these levels then the retracement zone at 1.1547 to 1.1633 will become the primary upside target.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the EUR/USD on Friday will be determined by trader reaction to 1.1332.

Bullish Scenario

A sustained move over 1.1332 will indicate the presence of buyers. The first target is yesterday’s high at 1.1360. Taking out this level could create enough upside momentum to challenge the main top at 1.1383 and the first pivot at 1.1397.

Bearish Scenario

A sustained move under 1.1332 will signal the presence of sellers. This could trigger a break into the long-term Fibonacci and short-term 50% level at 1.1291.

Buyers could come in on the first test of 1.1291, but if it fails, we could see an acceleration into 1.1222.