EUR/USD Mid-Session Technical Analysis for February 4, 2020

A combination of weaker-than-expected Euro Zone producer inflation data and stronger-than-expected U.S. Factory Orders are helping to pressure the Euro against the U.S. Dollar on Tuesday.

Euro Zone producer prices fell in December on the year for the fifth consecutive month but their drop was slower than in November, estimates from the EU statistics office showed on Tuesday.

Eurostat said prices at factory gates in the 19 counties sharing the Euro dropped by 0.7% year-on-year in December, after a 1.4% plunge in November, in line with market expectations.

In the U.S., factory orders rose 1.8% in December, the Commerce Department said Tuesday. Economists were looking for a 1.5% increase.

At 16:08 GMT, the EUR/USD is trading 1.1039, down 0.0022 or -0.20%.

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 1.0992 will signal a resumption of the downtrend. The main trend changes to up on a move through 1.1173.

The minor trend is up according to the daily swing chart. This move shifted momentum to the upside. A trade through 1.1095 and 1.1109 will indicate the counter-trend buying is getting stronger.

The major retracement zone is 1.1059 to 1.1017. The EUR/USD is currently trading inside this range.

The short-term range is 1.0992 to 1.1095. Its retracement zone at 1.1043 to 1.1031 is currently being tested.

The main range is 1.1173 to 1.0992. Its retracement zone at 1.1083 to 1.1104 is the first potential upside target.

Daily Technical Forecast

Based on the early price action and the current price at 1.1039, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to a support cluster at 1.1032 to 1.1031.

Bearish Scenario

A sustained move under 1.1031 will indicate the presence of sellers. This could trigger a further decline into the Fibonacci level at 1.1017, followed closely by an uptrending Gann angle at 1.1012. This is a potential trigger point for an acceleration into the main bottom at 1.0992.

Bullish Scenario

A sustained move over 1.1032 will signal the presence of buyers. This could trigger a short-covering rally into a 50% level at 1.1043. Overtaking this level will likely lead to a test of the main 50% level at 1.1059.