EUR/USD Mid-Session Technical Analysis for December 31, 2021

The Euro is spiking to the upside at the mid-session on Friday as buyers took advantage of the thin holiday volume. The move may have been fueled by end-of-the-year position-squaring or possibly the news that China would raise its Euro weightings in its key Yuan Index basket.

At 16:44 GMT, the EUR/USD is trading 1.1374, up 0.0049 or +0.44%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $105.70, up $0.48 or +0.46%.

China will adjust the weightings of a key Yuan index basket in 2022, the country’s foreign exchange trading platform said on Friday, in a move traders and analysts said would help ensure the Yuan’s value does not act as a brake on China’s exports.

Starting on January 1, the China Foreign Exchange Trade System (CFETS) will increase the U.S. Dollar’s weighting in the CFETS currency basket to 19.88% from 18.79% and raise the Euro’s weighting to 18.45% from 18.15%, according to an online statement.

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 1.1186 will reaffirm the downtrend.

The minor trend is up. This is controlling the momentum. A trade through 1.1274 will change the minor trend to down.

The nearest support is the pivot at 1.1326. The next support is the long-term Fibonacci level at 1.1291.

On the upside, the first target is a pivot at 1.1397. A second pivot at 1.1439 is additional resistance.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Friday is likely to be determined by trader reaction to 1.1326.

A sustained move over 1.1326 will indicate the presence of buyers. Taking out the intraday high at 1.1380 will indicate the buying is getting stronger. This could trigger a further move into the main top at 1.1383.

Taking out 1.1383 will change the main trend to up. This could create enough upside momentum to fuel a move into 1.1397, followed by 1.1439.