EUR/USD Mid-Session Technical Analysis for March 23, 2020

The Euro is trading nearly flat against the U.S. Dollar on Monday with the price action mirroring the movement in European bonds. The Euro Area’s bond markets steadied after days of heightened volatility and wild swings, as investors assessed the impact of massive fiscal and monetary stimulus in the face of coronavirus.

At 12:02 GMT, the EUR/USD is trading 1.0713, up 0.0017 or -0.16%.

Expectations for higher spending across the Euro Zone have put upward pressure on bond yields, but those rises were also expected to be contained by the rise in asset purchases announced by the European Central Bank last week.

Daily Technical Analysis

The main trend is down according to the daily swing chart, but the early price action suggests a potentially bullish closing price reversal bottom may be forming.

The EUR/USD is in no position to change the main trend to up either, but there is plenty of room for a normal 50% to 61.8% retracement of the recent break. An intraday trade through 1.0636 will signal a resumption of the downtrend.

The short-term range is 1.1496 to 1.0636. Its retracement zone at 1.1066 to 1.1167 is the next potential upside target and new resistance. Since the main trend is down, sellers could come in on a test of this zone.

Daily Technical Forecast

Based on the early price action and the current price at 1.0713, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the steep downtrending Gann angle at 1.0696.

Bullish Scenario

A sustained move over 1.0696 will indicate the presence of buyers. This could trigger an acceleration to the upside since the nearest upside target is the short-term 50% level at 1.1066.

Bearish Scenario

A sustained move under 1.0696 will signal the presence of sellers. This could lead to a retest of 1.0636, followed by the April 10, 2017 main bottom at 1.0569.

Side Notes

A close over 1.0696 will form a daily closing price reversal bottom. If confirmed then this could lead to a 2 to 3 day counter-trend rally with 1.1066 to 1.1167 the next likely upside target.