EUR/USD Mid-Session Technical Analysis for December 19, 2018

The Euro is trading higher ahead of today’s U.S. Federal Reserve interest rate and monetary policy decisions, due to be released at 1900 GMT. The catalyst behind today’s rally is the news that Italy and the European Commission, the European Union’s executive arm, have announced a new budget deal after weeks of wrangling over the country’s 2019 spending plans. Later today, the Fed is expected to announce a 25-basis point rate hike and signal it will slow the pace of rate hikes in 2019 and 2020.

At 1202 GMT, the EUR/USD is trading 1.1402, up 0.0037 or +0.33%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1444 will negate a closing price reversal top and change the main trend to up. The next upside target is the main top at 1.1474, followed closely by another main top at 1.1501.

The downtrend will resume on a trade through the main bottom at 1.1270. This is followed closely by the next main bottom at 1.1267. This is a potential trigger point for a further break into the November 12 main bottom at 1.1216.

The market is also starting to pull away from several retracement zones that had been hindering the trade for several weeks. These levels are new support at 1.1395, 1.1370, 1.1345 and 1.1315.

The major, long-term retracement zone is 1.1447 to 1.1185. The EUR/USD has been trading inside this retracement zone for over a month.

Daily Swing Chart 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 Fibonacci level at 1.1395.

Bullish Scenario

A sustained move over 1.1395 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the resistance cluster at 1.1444 to 1.1447. We could see sellers on the first test of this area, but if buyers can take out 1.1447 then look for a surge into 1.1474.

Bearish Scenario

A sustained move under 1.1395 will signal the presence of sellers. This could lead to a labored break with potential targets layered at 1.1370, 1.1345 and 1.1315.