EUR/USD Mid-Session Technical Analysis for January 24, 2019

The Euro is trading lower shortly ahead of the European Central Bank’s interest rate and monetary policy decisions, and ECB President Mario Draghi’s press conference. The ECB is widely expected to leave its benchmark interest rate unchanged, while expressing caution about slowing economic growth in the Euro Zone. Furthermore, policymakers are expected to reaffirm its plan to raise its benchmark interest rate by the end of the year.

At 1207 GMT, the EUR/USD is trading $1.1346, down 0.0034 or -0.30%.

According to traders, the focus will be on how explicitly, if at all, the ECB policymakers acknowledge the economic slowdown.

Earlier today, German and Euro Zone manufacturing PMIs came in lower than expected. German Flash Manufacturing PMI was 49.9, putting it in contraction territory. Traders were looking for 51.4. German Flash Services PMI, however, was higher than forecast at 53.1. Euro Zone Flash Manufacturing PMI was 50.5, missing the 51.5 estimate. Euro Zone Flash Services PMI was 50.8, lower than the 51.5 forecast.

Today’s weak data could encourage Draghi to acknowledge a potentially longer lasting slowdown. This dovish assessment could extend today’s weakness. Recently, analysts were predicting an ECB rate hike in third quarter 2019. However, today’s weak data combined with a dovish Draghi could force them to move the rate hike into the fourth quarter.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top at 1.1570 on January 10. A trade through 1.1309 will change the main trend to down.

The minor trend is down. This is confirms the downtrend in momentum. A trade through 1.1395 will change the minor trend to up and shift momentum to the upside.

Additional resistance is the retracement zone at 1.1409 to 1.1440.

Daily Swing Chart Technical Forecast

If the selling pressure continues then look for sellers to take out the bottom at 1.1309. This could drive the EUR/USD into the December 14 main bottom at 1.1270. This is followed by the November 12 bottom at 1.1216.

If for some reason Draghi isn’t dovish and is actually hawkish then look for buyers to go after 1.1395. This would surprise traders and could drive the EUR/USD into 1.1409 to 1.1440.