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EUR/USD Mid-Session Technical Analysis for July 10, 2020

By:
James Hyerczyk
Published: Jul 10, 2020, 13:25 UTC

The direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the main 50% level at 1.1295.

EUR/USD

The Euro is trading higher against the U.S. Dollar on Friday after recovering earlier losses. Shortly after the opening, the single-currency was pressure as investors flocked to the safe-haven dollar as rising COVID-19 cases in the United States threatened to derail the global economic recovery.

The Euro picked up support throughout the overnight session as investors shifted their focus on new developments regarding the European Union’s recovery fund, which aims to help the region’s economy recover from the coronavirus crisis.

At 13:04 GMT, the EUR/USD is trading 1.1303, up 0.0019 or +0.17%. This is up from an intraday low of 1.1255.

Hopes are high that the 750 billion Euro ($851.70 billion) fund will be approved at a European Union summit late next week. Designed to mostly offer grants to countries worst hit by the coronavirus, it has been one of the main drivers of a drop in Southern European borrowing costs led by Italy in the past few weeks.

On Wednesday, European Council President Charles Michel said the EU needed to reach an agreement quickly on the fund but much negotiation was still needed.

“We don’t anticipate a fast agreement (little in the EU moves quickly), but would be cautious around putting too much weight on negative-sounding headlines, which are almost certain to be seen,” Mizuho analysts told clients.

“Instead, we stick to our expectations for a slow but inexorable grind towards a consensus relatively close to the Franco-German proposal,” they said, referring to an initial proposal which offered 500 billion Euros in grants before the EU added 250 billion Euros in loans to its plan.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1371 will signal a resumption of the uptrend. The main trend will change to down on a trade through 1.1185.

After earlier weakness, the EUR/USD appears to be trying to reestablish support at a pair of 50% levels at 1.1295 and 1.1278.

The new minor range is 1.1371 to 1.1255. Its retracement zone at 1.1313 to 1.1327 is the next upside target. The test of this zone should determine if prices move higher or lower.

Daily Technical Forecast

Based on the early price action and the current price at 1.1303, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the main 50% level at 1.1295.

Bullish Scenario

A sustained move over 1.1295 will indicate the presence of buyers. This could drive the EUR/USD into a series of potential resistance levels including a 50% level at 1.1313, an uptrending Gann angle at 1.1325 and a Fibonacci level at 1.1327.

Sellers may come in on a test of these levels. They are going to try to form a secondary lower top. However, overcoming 1.1327 could trigger an acceleration to the upside.

Bearish Scenario

Sellers could regain control if 1.1313 to 1.1327 proves to be solid resistance. The selling will strengthen if 1.1295 fails as support. This could trigger a further break into 1.1278, followed by an uptrending Gann angle at 1.1255. This is a potential trigger point for an acceleration to the downside.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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