EUR/USD Mid-Session Technical Analysis for January 31, 2020

The Euro is trading higher against the U.S. Dollar on Friday despite weaker than expected Euro Zone economic data. The Euro Zone economy grew less than expected in the last quarter of 2019, a first estimate showed on Friday, while core inflation slowed in January, a worrying sign for the European Central Bank (ECB).

At 12:15 GMT, the EUR/USD is trading at 1.1043, up 0.0012 or +0.11%.

Gross Domestic Product (GDP) in the 19 countries sharing the Euro rose 0.1% quarter-on-quarter for a 1.0% year-on-year gain, according to Eurostat, the European Union’s statistics office. Economists polled by Reuters had expected a 0.2% quarterly and a 1.1% annual increase.

Eurostat also said consumer prices fell 1.0% month-on-month in January for a 1.4% year-on-year rise, accelerating from a 1.3% rate in December and 1.0% in November. Without unprocessed food and energy – what the ECB calls core inflation – prices grew 1.3% year-on-year, decelerating from 1.4% in December.

The U.S. will release a slew of important economic reports, including Core PCE Price Index, Employment Cost Index, Personal Spending, Personal Income, Chicago PMI and Revised University of Michigan Consumer Sentiment.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0992 will signal a resumption of the downtrend. The EUR/USD is in no position to change the main trend to up, but there is room for a normal 50% to 61.8% retracement.

The EUR/USD is currently trading inside a major retracement zone at 1.1017 to 1.1059. Trader reaction to this zone should determine the near-term direction of the Forex pair.

The short-term range is 1.1173 to 1.0992. Its retracement zone at 1.1083 to 1.1104 is the next upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

Daily Technical Forecast

Based on the early price action and the current price at 1.1043, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the uptrending Gann angle at 1.1032.

Bullish Scenario

A sustained move over 1.1032 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into 1.1059, followed closely by a downtrending Gann angle at 1.1063. Sellers could come in on a test of these levels.

However, 1.1063 is also a trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 1.1032 will signal the presence of sellers. The first two targets are 1.1017 and an uptrending Gann angle at 1.1012. This is the last potential support angle before the 1.0992 main bottom.