EUR/USD Mid-Session Technical Analysis for December 8, 2021

The Euro is edging higher against the U.S. Dollar after the European Central Bank (ECB) said Euro Zone inflation will take longer to fall back to 2%. However, gains could be limited after a reversal to the upside in U.S. Treasury yields.

Yields were moving lower early in the session but turned higher after Pfizer and its partner BioNTech said their booster dose provides similar protection against the omicron variant of COVID-19 as two doses did against the older strain, citing their own preliminary lab tests. They also said two doses could still protect against severe disease.

At 13:36 GMT, the EUR/USD is trading 1.1304, up 0.0035 or +0.31%. On Tuesday, the Invesco CurrencyShares Euro Trust (FXE) ETF settled at $104.79, down $0.12 or -0.11%.

Euro Zone inflation will take longer to fall back to target than earlier thought but so far there is no evidence that high prices are becoming embedded in wages, ECB Vice President Luis de Guindos said on Wednesday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 1.1186 reaffirms the downtrend. The main trend will change to up on a move through 1.1608.

The minor trend is up. This is controlling the momentum. A trade through 1.1383 will reaffirm the minor up trend. A move through 1.1228 will change the minor trend to down.

The EUR/USD is currently trading on the strong side of a Fibonacci level at 1.1291, making it potential support.

On the upside, resistance is a pair of 50% levels at 1.1397 and 1.1439.

Daily Swing Chart Technical Forecast

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

Bullish Scenario

A sustained move over 1.1291 will indicate the presence of buyers. The first target is a minor pivot at 1.1306. Since the main trend is down, sellers are likely to come in on the first test of this level. Overcoming it, however, could trigger an acceleration into 1.1383 – 1.1397.

Bearish Scenario

A sustained move under 1.1291 will signal the presence of sellers.  If this creates enough downside momentum then look for the selling to possibly extend into 1.1228. If this price fails then look for a near-term test of 1.1186 – 1.1168.