EUR/USD Mid-Session Technical Analysis for January 3, 2018

The EUR/USD is trading lower on Wednesday as investors lighten-up positions ahead of today’s Fed minutes. At 1900 GMT, the central bank will release the minutes of the December Federal Open Market Committee meeting, where it raised rates for a third time in 2017.

Most of the focus will likely be on the FOMC commentary relating to the inflation outlook given the Fed’s underlying consumer inflation (CPI) forecasts were left unchanged at this meeting despite most members factoring in the impact of tax cuts delivered by the Trump administration in late December.

The EUR/USD will weaken further if the minutes are perceived as hawkish. Dovish minutes should trigger a resumption of the current uptrend.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2081 will signal a resumption of the uptrend. This could create the upside momentum needed to take out the September 8 main top at 1.2092.

Today’s inside move suggests investor indecision and impending volatility.

Daily Technical Forecast

A sustained move over 1.2092 will signal the presence of buyers. This may generate the upside momentum needed to challenge the major long-term 50% level at 1.2166.

A sharp break to the downside is likely to lead to a test of an uptrending Gann angle at 1.1936. Since the main trend is up, we could see a technical bounce on the first test of this angle. If it fails then look for the selling to extend into a short-term 50% level at 1.1909, a long-term Fibonacci level at 1.1886 and a short-term Fibonacci level at 1.1868.