EUR/USD Mid-Session Technical Analysis for February 3, 2020

The Euro is trading lower against the U.S. Dollar on Monday as Euro Zone factory activity contracted again in January but did so at its shallowest rate since mid-2019, according to a survey which suggested the worst may be over for the bloc’s battered manufacturing industry, according to Reuters.

IHS Markit’s final manufacturing Purchasing Managers’ Index rose to a nine-month high of 47.9 in January, just above a preliminary reading of 47.8 and edging closer to the 50 mark that separates growth from contraction. It came in at 46.3 in December.

At 11:55 GMT, the EUR/USD is trading 1.1061, down 0.0033 or -0.30%.

Losses may have been limited by higher bond yields. Euro Zone bond yields edged up on Monday, reflecting a slightly more positive tone in world markets that have been gripped by worries over the economic fallout from the spread of the coronavirus.

Germany’s benchmark 10-year Bund yield was 1.1 basis points higher on the day at -0.43%, not too far off more than three-month lows hit at the end of last week.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0992 will signal a resumption of the downtrend. The main trend will change to up on a move through 1.1173.

The minor trend is also down. A trade through 1.1109 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 1.1173 to 1.0992. Its retracement zone at 1.1083 to 1.1104 is resistance. It stopped the selling on Friday at 1.1095.

On the downside, the major support zone is 1.1059 to 1.1017. This area placed a row in last week’s bottoming action.

Daily Technical Forecast

Based on the early price action and the current price at 1.1061, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the main 50% level at 1.1059.

Bullish Scenario

Holding 1.1059 as support will indicate the presence of buyers. If this move generates enough upside momentum then look for a retest of the short-term 50% level at 1.1083. Overtaking this level targets the short-term Fibonacci level at 1.1104, followed by the downtrending Gann angle at 1.1113.

Bearish Scenario

Crossing to the weak side of the 50% level at 1.1059 will signal the presence of sellers. The first downside target is a potential support cluster at 1.1053 to 1.1052.

Taking out 1.1052 could trigger an acceleration to the downside with the next targets coming in at 1.1022 and 1.1017.