EUR/USD Mid-Session Technical Analysis for December 27, 2019

The Euro is trading higher against the U.S. Dollar on Friday as speculators unwound their short positions before the end of the year, with thin liquidity during the holiday season amplifying the move. According to Reuters, bleak economic data meant hedge funds bet on an even weaker Euro during 2019, but the battered currency rose on Friday to an eight day high of 1.1150.

At 11:42 GMT, the EUR/USD is trading 1.1146, up 0.0050 or +0.45%.

“What I’m seeing here, it’s mainly some Euro strength,” said Ulrich Leuchtmann, an analyst at Commerzbank.

“This very negative Euro sentiment has prevailed over 2019 and has run out of steam…coming to this period of low liquidity, more people are more inclined to remove those short positions,” Leuchtmann said.

This short-term trend is likely to continue next week too as the end of the decade approaches, he added.

“A lot of specs (speculators) might consider if it wise to keep these (short) positions over the period.”

According to Reuters, “In the week to December 17, leveraged funds trimmed their short Euro positions to $9.16 billion, further away from the 2019 high of $14.84 billion. However, the upheaval in the Euro may be limited by the large number of options expiring at $1.1155-$1.1160.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The main trend will change to down on a trade through 1.1067.

The main range is 1.0879 to 1.1313. Its retracement zone at 1.1096 to 1.1045 is support. After forming a base inside this zone throughout the week, the EUR/USD is attempting to breakout to the upside.

Potential resistance levels are layered at 1.1146, 1.1185 and 1.1209.

Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the 50% level at 1.1146.

Bullish Scenario

A sustained move over 1.1146 will indicate the buying is getting stronger. This could trigger a spike into the long-term Fibonacci level at 1.1185, followed closely by the Fibonacci level at 1.1209.

Bearish Scenario

A sustained move under 1.1146 will signal the presence of sellers. If this move creates enough downside momentum then look for a possible retest of today’s intraday low at 1.1096.