EUR/USD Mid-Session Technical Analysis for December 22, 2021

The Euro is edging higher against the U.S. Dollar on Wednesday in a below-average volume trade, suggesting the major players are starting to move to the sidelines ahead of Friday’s bank holiday. The price action on either side of Christmas tends to be low in volatility for the single-currency.

This year, these seasonal tendencies will be blended with the Omicron variant outbreak, the threat of new restrictions and traders still processing a week full of key central bank decisions

At 11:36 GMT, the EUR/USD is trading 1.1306, up 0.0025 or +0.22%. On Tuesday, the Invesco CurrencyShares Euro Trust ETF settled at $104.92, up $0.04 or +0.04%.

Perhaps lending some support to the single currency are firm German bund yields, which are hovering near three-week highs amid improved risk sentiment in equity markets. Hawkish comments from the European Central Bank (ECB) are also helping to underpin prices.

Some traders are starting to unwind bullish dollar positions on the hopes that the Omicron coronavirus variant would only have a limited economic fallout, however, health officials remain cautious.

In other news, traders will get the opportunity to react to the latest data on U.S. Final GDP, Consumer Confidence and Existing Home Sales before volume is expected to die down.

Daily Swing Chart Technical Analysis

The main trend is down, but the secondary higher bottom at 1.1222 suggests traders may make an attempt to turn the trend to up.

A move through 1.1360 will change the main trend to up, but taking out 1.1383 will make a more compelling argument for the change in trend.

Taking out 1.1222 will signal a resumption of the downtrend, while a move through 1.1186 will reaffirm the trend.

The EUR/USD is currently trading on the strong side of a long-term Fibonacci level at 1.1291, making it support. If the main trend changes to up then its pivot at 1.1397 will become the primary upside target.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Wednesday will be determined by trader reaction to 1.1291.

Bullish Scenario

A sustained move over 1.1291 will indicate the presence of buyers. If this move creates enough upside momentum then look for a short-term rally into at least 1.1360.

Bearish Scenario

A sustained move under 1.1291 will signal the presence of sellers. This could lead to a retest of the nearest main bottom at 1.1222.