EUR/USD Mid-Session Technical Analysis for July 7, 2020

The Euro is trading lower against the U.S. Dollar on Tuesday after a report from the European Commission warned of a deeper recession and less steep rebound. Weaker demand for higher-risk assets is also sending investors into the U.S. Dollar for protection.

At 08:42 GMT, the EUR/USD is trading 1.1277, down 0.0031 or -0.28%.

The Euro Zone economy will drop deeper into recession this year and rebound less steeply in 2021 than previously thought, the European Commission forecast on Tuesday, with France, Italy and Spain struggling the most due to the COVID-19 pandemic.

The downbeat assessment of Europe’s economy comes amid concern the U.S. recovery may also be faltering as a surge of new coronavirus infections prompts states to delay and in some cases reverse plans to let stores reopen and activities resume.

The EU executive said the 19 nation single currency area would contract by a record 8.7% this year before rising by 6.1% in 2021. In early May, the Commission had forecast a downturn this year of 7.7% and a rebound in 2021 of 6.3%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1349 will change the main trend to up. A trade through 1.1185 will signal a resumption of the downtrend.

The minor trend is up. A trade through 1.1219 will change the minor trend to down. This will shift momentum to the downside.

The short-term range is 1.1422 to 1.1168. Its 50% level at 1.1295 is controlling the near-term direction of the EUR/USD.

The major support range is 1.1167 to 1.1066.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1277, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the short-term pivot at 1.1295.

Bearish Scenario

A sustained move under 1.1295 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the minor bottom at 1.1219.

A failure to hold 1.1219 should trigger a break into the main bottom at 1.1185, followed by a support cluster at 1.1168 to 1.1167.

Bullish Scenario

A sustained move over 1.1295 will signal the presence of buyers. This could trigger a surge into 1.1345 to 1.1349. The latter is a potential trigger point for an acceleration to the upside.