EUR/USD Mid-Session Technical Analysis for March 6, 2020

Euro is trading sharply higher on Friday against the U.S. Dollar as a dramatic collapse in U.S. government yields sent the dollar on course of its worst week since 2016. Investors have slashed their expectations for U.S. interest rates following an emergency Federal Reserve 50 basis point cut this week, driving the greenback sharply lower.

At 12:10 GMT, the EUR/USD is trading 1.1323, up 0.0081 or +0.71%.

The move by the Fed erased the yield advantage that had fueled one of the popular carry trades globally – borrowing at negative rates in the Euro to buy U.S. assets. Traders are now betting the Fed will have to make a second 50 basis point rate cut later this month to fight the potential impact of the coronavirus on the global economy.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the August 6, 2019 main top at 1.1250 and the July 11, 2019 main top at 1.1286.

A trade through 1.0778 will change the main trend to down. This is highly unlikely. However, it is inside the window of time to form a closing price reversal top. A close below 1.1242 will form this potentially bearish chart pattern.

The minor range is also up. A trade through 1.1096 will change the minor trend to down. This will also shift momentum to the downside.

The main range is 1.1413 to 1.0778. Its retracement zone at 1.1170 to 1.1086 is the nearest support area. This zone is controlling the near-term direction of the EUR/USD.

Daily Technical Forecast

Based on the early price action and the current price at 1.1323, the direction of the EUR/USD is likely to be determined by trader reaction to the downtrending Gann angle at 1.1301.

Bullish Scenario

A sustained move over 1.1301 will indicate the presence of buyers. If this move continues to generate enough upside momentum then look for an eventual test of the June 25, 2019 main top.

Bearish Scenario

A sustained move under 1.1301 will signal the presence of sellers. This could lead to a break under Thursday’s close at 1.1242, turning the EUR/USD lower for the session and putting it in a position to form a closing price reversal top.

The next key downside target is the steep uptrending Gann angle at 1.1218. If this angle fails then look for the selling to possibly extend into the downtrending Gann angle at 1.1188, followed by the main Fibonacci level at 1.1170.