EUR/USD Mid-Session Technical Analysis for May 1, 2020

The Euro is trading marginally higher against the U.S. Dollar on Friday on low volume with most of Europe closed for the May Day holiday. The early strength was a follow-through move related to yesterday’s impressive short-covering rally.

On Thursday, the European Central Bank (ECB) kept its monetary policy largely unchanged, reaffirming a pledge to buy 1.1 trillion Euros ($1.21 trillion) worth of assets this year, or more if needed, while offering to pay banks if they borrow from it to lend to companies and households struggling with the outbreak.

At 13:29 GMT, the EUR/USD is trading 1.0978, up 0.0022 or +0.20%.

In a bulletin published on Friday, the ECB said it expected the Euro area’s Gross Domestic Product (GDP) to shrink by as much as 15% this quarter before “a protracted and incomplete recovery” in the remainder of the year.

“The annual figure under the severe scenario reflects a quarterly real GDP growth reaching a trough of around -15% in the second quarter of 2020, followed by a protracted and incomplete recovery, entailing quarterly growth rates of around 6% and 3%, respectively, in the third and fourth quarters,” the ECB said.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at 1.0727 on April 24.

A trade through 1.0991 will change the main trend to up. A move through 1.0727 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the upside momentum. A trade through 1.0810 will change the minor trend to down.

The first support is a retracement zone at 1.0892 to 1.0831.

The short-term range is 1.1147 to 1.0727. Its retracement zone at 1.0937 to 1.0987 is currently being tested.

The main range is 1.1496 to 1.0636. If the main trend changes to down then look for the rally to possibly extend into its retracement zone at 1.1066 to 1.1167.

Daily Swing Chart Technical Analysis

Based on the early price action and the current price at 1.0978, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the Fibonacci level at 1.0987.

Bullish Scenario

A sustained move over 1.0987 will indicate the presence of buyers. Taking out 1.0991 will change the main trend to up. This could trigger an acceleration to the upside with the next target zone 1.1066 to 1.1167.

Bearish Scenario

A sustained move under 1.0987 will signal the presence of sellers. This could lead to a labored break with potential support lined up at 1.0937, 1.0892 and 1.0831.