EUR/USD Mid-Session Technical Analysis for July 20, 2020

The Euro is edging a little higher on Monday after giving back most of its earlier gains. The price action suggests we could be seeing a “buy the rumor, sell the fact” situation after the single-currency began its retreat after hitting a 19-week high earlier in the session.

Traders said investors began lightening up on the long side after European Union summit chairman Charles Michel said a recovery fund to revive economies hit by the COVID-19 pandemic could contain 390 billion Euros in grants.

At 14:53 GMT, the EUR/USD is trading 1.1426, up 0.0001 or +0.00%.

EU leaders have made progress in Brussels after three days of talks, but they remain at odds over how to carve up the proposed 750 billion Euros ($858.98 billion) recovery fund designed to help Europe cope with its deepest recession since World War Two.

The fund’s backers initially proposed 500 billion Euros of grants and 250 billion of loans. Some countries objected to that much in grants. They saw 350 billion Euros as the maximum, but showed signs of compromising.

Traders said the smaller the amount of grants, the more the Euro would fall.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the previous minor top at 1.1452. The subsequent rally to 1.1468 fell short of the March 9, 2020 main top at 1.1496.

The main trend will change to down on a move through the nearest swing bottom at 1.1185. This is highly unlikely, but the prolonged move up in terms of price and time has put the EUR/USD in a position to post a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 1.1371 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 1.1255 to 1.1468. Its 50% level at 1.1362 is the nearest support level.

The new short-term range is 1.1185 to 1.1468. If the minor trend changes to down then look for the selling to possibly extend into its retracement zone at 1.1326 to 1.1293.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1426, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to Friday’s close at 1.1426.

Bearish Scenario

A sustained move under 1.1426 will indicate the presence of sellers. If this move creates enough downside momentum then look for a possible break into 1.1371 to 1.1362. If the latter fails as support then look for the selling to possibly extend into the next potential support zone at 1.1326 to 1.1293.

Bullish Scenario

A sustained move over 1.1426 will signal the presence of buyers. This could lead to a retest of the intraday high at 1.1468. Overtaking this level could create the upside momentum needed to challenge a pair of main tops at 1.1496 to 1.1514.

Side Notes

A close below 1.1426 will form a closing price reversal top on the daily chart. If confirmed, this could trigger the start of a 2 to 3 day correction.

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