EUR/USD Mid-Session Technical Analysis for June 2, 2021

The Euro is trading lower on Wednesday as Euro Zone government bond yields slipped one to two basis points lower, edging down ahead of the European Central Bank meeting next week. Prices are also being pressured by yesterday’s robust U.S. ISM manufacturing PMI report and position-squaring ahead of Friday’s U.S. Non-Farm Payrolls report.

At 13:07 GMT, the EUR/USD is trading 1.2188, down 0.0024 or -0.19%.

Yields were little changed overall on Tuesday, even after HICP data showed Euro Zone inflation rose to 2% in May – a sign that markets were confident the European Central Bank would not decide to slow the pace of its bond buys when it meets on June 10.

The ECB has said a near-term rise in inflation is driven by one-off factors and long-term price pressures remain subdued, meaning stimulus will still be needed. Yields have fallen in the last week in response to dovish comments from ECB officials.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has shifted to the downside. A trade through 1.2133 will change the main trend to down. A move through 1.2266 will signal a resumption of the uptrend.

The minor range is 1.2266 to 1.2133. The EUR/USD is currently trading on the weak side of its 50% level at 1.2200.

The first short-term 50% level is 1.2159. This is followed by the second short-term 50% level at 1.2125.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD is likely to be determined by trader reaction to a pair of 50% levels at 1.2200 and 1.1259.

Bullish Scenario

A sustained move over 1.2200 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the minor top at 1.2254, followed closely by the main top at 1.2266.

Bearish Scenario

A sustained move under 1.2200 will be the first sign of weakness, but a sustained move under 1.2159 will indicate the selling pressure is getting stronger. This could trigger a quick break into the main bottom at 1.2133, followed by the 50% level at 1.2125. This is a potential trigger point for an acceleration to the downside.