EUR/USD Mid-Session Technical Analysis for July 5, 2021

The Euro is inching higher at the mid-session on Monday in a lackluster trade amid low volume due to the U.S. Independence Day holiday. The single-currency is being supported following Friday’s release of a mixed bag of U.S. labor data that may have dampened the chances of a quick change to the Fed’s monetary stimulus.

At 16:43 GMT, the EUR/USD is trading 1.1868, up 0.0003 or +0.03%.

In Friday’s U.S. Non-Farm Payrolls report – the headline number beat the estimates, but unemployment ticked higher, workforce participation didn’t budge and average hourly earnings met expectations – suggesting positive progress, but space for the Federal Reserve to wait before tapering asset buying or hiking rates.

In other news, Euro Zone businesses expanded activity at the fastest rate in 15 years in June as the easing of more coronavirus restrictions brought life back to the bloc’s dominant service industry, a survey showed on Monday.

IHS Markit’s final composite Purchasing Managers’ Index (PMI), seen as a good gauge of economic health, jumped to 59.5 last month from May’s 57.1, its highest level since June 2006.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside following the confirmation of Friday’s closing price reversal bottom.

A trade through 1.1808 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through 1.1975.

The minor range is 1.1975 to 1.1808. Its 50% level at 1.1891 is potential resistance.

The long-term resistance is the 50% level at 1.2027. This is followed by the short-term retracement zone at 1.2037 to 1.2091. The combination of these zone creates a potential resistance cluster at 1.2027 to 1.2037.

Short-Term Outlook

The short-term direction of the EUR/USD will be determined by trader reaction to 1.1891.

Bearish Scenario

A sustained move under 1.1891 will indicate the presence of sellers. If this move generate enough downside momentum then look for the selling to possibly extend into 1.1808. Taking out this level could trigger an acceleration to the downside with 1.1704 the next likely target.

Bullish Scenario

A sustained move over 1.1891 will signal the presence of buyers. This could create the upside momentum needed to challenge the main top at 1.1975. Taking out this level will change the main trend to up with the resistance cluster at 1.2027 – 1.2037 the next likely target.