EUR/USD Mid-Session Technical Analysis for January 27, 2021

The Euro is trading lower against the U.S. Dollar on Wednesday, pressured after a European Central Bank official said the bank was monitoring the currency closely, while the dollar perked up ahead of the Federal Reserve’s first meeting of the year.

ECB governing council member Klaas Knot said the central bank has room to cut its deposit rate further, should it be necessary to improve financing conditions and reach its inflation target.

At 13:45 GMT, the EUR/USD is trading 1.2103, down 0.0059 or -0.49%.

Knot’s comment constituted the most explicit hint to date from an ECB policymaker about the possibility of a rate cut to stem a rally in the Euro – a move that seemed highly unlikely until recently.

ECB President Christine Lagarde has repeatedly said the central bank is carefully monitoring the single currency’s exchange rate.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the formation of a secondary lower top on January 22 suggests momentum may be getting ready to shift to the downside.

A trade through 1.2190 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.2054. It will be reaffirmed if 1.2025 fails as support. This is a potential trigger point for an acceleration to the downside.

The minor range is 1.2054 to 1.2190. The EUR/USD is currently trading on the weak side of its 50% level at 1.2122.

The short-term range is 1.2349 to 1.2054. Its retracement zone at 1.2202 to 1.2236 is resistance.

The main range is 1.1800 to 1.2349. Its retracement zone at 1.2074 to 1.2010 is support. This zone stopped the selling at 1.2054 on January 18.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the 50% level at 1.2122.

Bearish Scenario

A sustained move under 1.2122 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the main 50% level at 1.2074, followed by main bottoms at 1.2054 and 1.2025 and the main Fibonacci level at 1.2010. The latter is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over 1.2122 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the main top at 1.2190, followed by short-term retracement zone at 1.2202 to 1.2236.

For a look at all of today’s economic events, check out our economic calendar.