EUR/USD Mid-Session Technical Analysis for July 12, 2018

The Euro is trading lower on Thursday. The single-currency is being pressured by a stronger U.S. Dollar, which is being supported by firmer U.S. Treasury yields. Sellers are also liquidating long positions ahead of the U.S. consumer inflation report, due to be released at 1230 GMT.

At 1126 GMT, the EUR/USD is trading 1.1655, down 0.0019 or -0.17%.

On Wednesday, the EUR/USD plunged after the U.S. reported the biggest annual increase in 6-1/2 years in June U.S. producer prices, thanks to gains in the cost of services and motor vehicles.

On Thursday, the U.S. consumer inflation report could temporarily take market focus away from trade worries, particularly if it surprises to the upside like yesterday’s producer prices report. Traders are looking for both the headline Consumer Price Index (CPI) and the Core Consumer Price Index to post a 0.2 percent increase.

A strong showing in the U.S. CPI report will solidify the chances of at least two more Fed rate hikes this year. This should underpin interest rates, making the U.S. Dollar a more desirable investment.

Daily Technical Analysis

The main trend is up according to the daily swing chart. So far, all we’ve seen is a normal correction of the last rally, however, trading beyond the retracement zone at 1.1659 to 1.1628, will shift momentum to the downside.

A trade through 1.1791 will signal a resumption of the uptrend. The trend will change to down when sellers take out 1.1527.

The main range is 1.1851 to 1.1509. Its retracement zone is 1.1680 to 1.1720.

The short-term range is 1.1527 to 1.1791. Its retracement zone at 1.1659 to 1.1628 is currently being tested. Since the main trend is up, we’ll be looking for potential buyers on the test of this area.

Daily Technical Forecast

Based on the early trade, the key level to watch is 1.1659. This support cluster is being formed by a combination of an uptrending Gann angle and the short-term 50% level.

A sustained move under 1.1659 will indicate the selling pressure is increasing. This could trigger a break into the Fibonacci level at 1.1628. If buyers fail to stop the price slide at this level then look for a potential acceleration to the downside with the next target angle coming in at 1.1584.

A sustained move over 1.1659 will signal the return of buyers. This could lead to a retest of the main 50% level at 1.1680. This price is a potential trigger point for an acceleration to the upside with the key target 1.1720.

Watch the price action and read the order flow at 1.1659 all session. Trader reaction to this price cluster is controlling the direction of the market today. Look for volatility at 1230 GMT with the release of the U.S. consumer inflation report.