EUR/USD Mid-Session Technical Analysis for July 29, 2021

The Euro hit its highest level against the U.S. Dollar since July 6 on Thursday after the U.S. Federal Reserve’s reassurance that interest rate hikes remain distant. The recent losses in the single-currency had already lost momentum leading into Wednesday’s Federal Reserve meeting and Chairman Jerome Powell’s remark that rate increases were “a ways away” was enough to drive it higher.

At 13:55 GMT, the EUR/USD is trading 1.1882, up 0.0038 or +0.32%.

The EUR/USD was also boosted by disappointing U.S. economic news. The U.S. second-quarter gross domestic product accelerated 6.5% on an annualized basis, considerably less that the 8.4% Dow Jones estimate.

Meanwhile, a separate data point showed that 400,000 people filed initial claims for unemployment benefits for the week ended July 24. That level is nearly double the pre-pandemic norm and above a Dow Jones estimate of 385,000.

In the Euro Zone, bond yields rose on Thursday as investor sentiment reached a record high and state-level data hinted that German inflation would exceed expectations.

Euro Zone economic sentiment hit a record high in July, estimates from the European Commission showed, though a drop in optimism among consumers and the slower rate of increase may signal the peak is fast approaching.

Finally, German consumer price increases accelerated in July, with several states reporting annual inflation rates between 3.4% and 4.3%, suggesting a national-estimate would exceed the 3.3% expected in a Reuters poll.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up earlier today when buyers took out the last swing top at 1.1881. The rally stopped just short of the next swing top at 1.1895. A trade through 1.1752 will change the main trend to down.

The short-term range is 1.1975 to 1.1752. The EUR/USD is currently testing its retracement zone at 1.1864 to 1.1890. The latter is a potential trigger point for an acceleration to the upside.

The main range is 1.2218 to 1.1752. If there is an upside breakout then look for the rally to possibly extend into its 50% level at 1.1985.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1864 and 1.1890.

Bearish Scenario

A sustained move under 1.1864 will indicate the presence of sellers. If this move creates enough momentum then look for the selling to possibly extend into 1.1819.

Bullish Scenario

A sustained move over 1.1890 will signal the presence of buyers. Taking out 1.1895 will reaffirm the uptrend. The daily chart indicates there is plenty of room to the upside so watch for a near-term acceleration into 1.1975 and 1.1985.