EUR/USD Mid-Session Technical Analysis for July 1, 2019

The Euro is trading lower on Monday, but clawing back more than half of its earlier losses. Shortly after the steady opening, the single-currency plunged in reaction to a rise in U.S. Treasury yields. The catalyst behind the move was the decision by U.S. President Donald Trump and Chinese President Xi Jinping to restart trade negotiations. The Euro was also pressured by weak PMI data.

At 12:37 GMT, the EUR/USD is trading 1.1356, down 0.0014 or -0.12%.

In other news, factory activity in the Euro Zone shrank faster last month than previously thought in a broad-based downturn, according to a survey on Monday that suggested there would be no quick turnaround. The weak data will likely add to calls for the European Central Bank (ECB) to ease monetary policy.

IHS Markit’s June final manufacturing Purchasing Managers’ Index (PMI) was 47.6, below an earlier flash reading of 47.8 and May’s 47.7, marking its fifth month below the 50 level separating growth from contraction.

Daily 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 on June 25 at 1.1413.

A trade through 1.1413 will negate the closing price reversal top and signal a resumption of the uptrend. A trade through today’s intraday low at 1.1317 will indicate the selling is getting stronger. The main trend will officially turn lower on a trade through 1.1181.

The minor range is 1.1413 to 1.1317. Its 50% level or pivot at 1.1365 is new resistance.

The main range is 1.1448 to 1.1107. Its retracement zone at 1.1318 to 1.1278 is new support. This zone is also controlling the longer-term direction of the EUR/USD.

The short-term range is 1.1181 to 1.1413. If the selling continues then look for a break into its retracement zone at 1.1297 to 1.1270. Since the main trend is up, buyers could come in on a test of this area.

The main and short-term retracement zones overlap to form the best potential support at 1.1278 to 1.1270.

Daily Technical Forecast

The EUR/USD is currently trading between support at 1.1318 and resistance at 1.1365. This price action suggests traders are torn between a weaker U.S. Dollar because of an anticipated rate cut by the Fed, and weakening Euro Zone data, which suggests the ECB may have to ease monetary policy.