EUR/USD Mid-Session Technical Analysis for December 4, 2018

The Euro is trading higher against the U.S. Dollar at the mid-session on Tuesday, but it has given back more than half of its losses. The earlier rally was fueled by a steep drop in U.S. Treasury yields, which made the dollar a less-attractive investment.

Although falling rates pressured the dollar, it was able to mount a comeback, erasing some its earlier losses. The move may have been fueled by comments from Federal Reserve Bank of New York President John Williams who said in a speech, the U.S. economy overall is “in really good shape”. He further added that the central bank will continue to evaluate incoming data as it decides on a policy path. Furthermore, he continues to expect further gradual increases in interest rates.

At 1648 GMT, the EUR/USD is trading 1.1358, up 0.0004 or +0.03%.

Finally, Williams said he expects price inflation to move a little above 2%. He also said he sees no signs that it will rise too high. He’s also looking for the economy to continue to grow at a strong rate of 2.5% next year.

Daily Technical Analysis

The main trend is down according to the daily swing chart although momentum is trending higher. A trade through 1.1474 will change the main trend to up. A move through 1.1267 will signal a resumption of the downtrend.

The minor trend is up. It turned up earlier today on a move through 1.1403. This move shifted momentum to the upside.

The price action is still being impacted by two retracement zones. On the upside, the retracement zone resistance is 1.1370 to 1.1395. On the downside, the support retracement zone is 1.1345 to 1.1315.

Daily Technical Forecast

Based on the current price at 1.1358, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the 50% level at 1.1345.

Bullish Scenario

A sustained move over 1.1345 will indicate the presence of buyers. Even if the EUR/USD mounts a rally from this level, it could run into a wall of resistance at 1.1370, 1.1374 and 1.1376.

A late session rally is possible if buyers can overcome 1.1376. This could drive the EUR/USD into 1.1395, followed by 1.1424.

Bearish Scenario

A sustained move under 1.1345 will signal the presence of sellers. This could trigger a spike into the next potential support level at 1.1315, followed by an uptrending Gann angle at 1.1296. This is a major support angle.