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

The Euro is under pressure against the U.S. Dollar on Friday amid a fresh wave of safe-haven buying into the greenback. Traders jumped into the safe-haven U.S. Dollar after U.S. air strikes on the Baghdad airport killed a senior Iranian military official, stoking tensions in the Middle East.

An Iraqi spokesman told Reuters that Iranian Major-General Qassem Soleimani and Iraqi militia commander Abu Hahdi al-Muhandis were killed in the attack.

At 12:32 GMT, the EUR/USD is trading 1.1133, down 0.0038 or -0.34%.

Traders will be watching preliminary German inflation numbers for December, due at 13:00 GMT. Economists polled by Reuters expect yearly inflation to have risen to 1.4% from 1.1% the month before.

Traders will also get the opportunity to react to an index of U.S. manufacturing activity. Also due at 15:00 GMT. However, traders will be more interested in the Fed minutes which will be released at 19:00 GMT.

The EUR/USD could plunge further if Iran decides to retaliate against the United States.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has shifted to the downside. A trade through 1.1067 will change the main trend to down. The uptrend will resume when buyers take out 1.1313.

The minor trend is down. The trend turned down earlier today when sellers took out the 1.1159 minor bottom. This move shifted momentum to the downside. The minor trend will change to up on a trade through 1.1276.

On the upside, potential resistance levels come in at 1.1146, 1.1185 and 1.1209. On the downside, potential retracement zone support comes in at 1.1095 to 1.1044.

Daily Technical Forecast

Based on the early price action and the current price at 1.1133, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the 50% level at 1.1146.

Bearish Scenario

A sustained move under 1.1146 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into the uptrending Gann angle at 1.1106. Since the main trend is up, buyers could come in on the first test of this angle. If it fails then look for the selling to possibly extend into the 50% level at 1.1095. This level is a potential trigger point for an acceleration to the downside with the next target a support cluster at 1.1044.

Bullish Scenario

Overcoming and sustaining a rally over 1.1146 will signal the return of buyers. This could trigger an intraday short-covering rally back to 1.1185.

Side Notes

Given the heightened tensions in the Middle East, our bias is to the downside. If Iran retaliates against the United States then look for a steep break with 1.1044 a potential downside target.