EUR/USD Mid-Session Technical Analysis for February 10, 2020

The Euro is trading slightly higher but inside the previous session’s range shortly after the U.S. opening on Monday. The price action reflects investor indecision, but in this case, it may represent the lack of sellers after Friday’s steep plunge tied to weaker-than-expected German factory output. Today, investors are shrugging off a drop in Euro Zone investor morale as indicated by the Sentix survey.

At 12:38 GMT, the EUR/USD is at 1.0951, up 0.0007 or +0.06%.

Investor morale in the Euro Zone fell for the first time in four months in February over fears that China will not be able to contain the coronavirus outbreak, a survey showed on Monday.

Sentix’s index for the Euro Zone fell to 5.2 from 7.6 in January. The Reuters consensus forecast was for a fall to 4.1.

The slight drop reflects the fact that investors thing the economic damage from the novel virus has been mostly limited to China, said Sentix chief Manfred Huebner, adding that the global economy was getting impetus from the United States.

“The outbreak of the coronavirus and the subsequent drastic measures taken by the Chinese government cast a shadow over the economic outlook,” said Huebner. “Fortunately, so far the effect is limited.”

He added:  “However, in view of the significant declines in Chinese economic data, it is clear that the negative effect is likely to be much greater if it does not become apparent in the coming days that the spread of the virus has been taken away.”

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0942 will signal a resumption of the downtrend. The main trend will change to up on a move through 1.1095. This is highly unlikely, but due to the steep break, the EUR/USD is ripe for a closing price reversal bottom. This won’t change the trend to up, but it could trigger a 2 to 3 day counter-trend rally.

The nearest retracement zone resistance is 1.1017 to 1.1059.

Daily Technical Forecast

Based on the early price action and the current price at 1.0951, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the long-term uptrending Gann angle at 1.0937.

Bearish Scenario

If 1.0937 fails as support then look for the selling to possibly extend into the next uptrending Gann angle at 1.0908. This is the last potential support angle before the October 1, 2019 main bottom at 1.0879.

Bullish Scenario

A sustained move over 1.0937 will signal the presence of buyers. This could lead to a test of the steep downtrending Gann angle at 1.0975. Since the trend is down, look for sellers on the first test of this angle.

Overcoming 1.0975 will indicate the buying is getting stronger with the next targets the former bottom at 1.0981 and the long-term uptrending Gann angle at 1.0994. This is the last potential resistance level before the Fibonacci level at 1.1017.