EUR/USD Mid-Session Technical Analysis for May 10, 2021

The Euro is inching higher against the U.S. Dollar on Monday but gains are being capped by firm Treasury yields, which returned to the same levels they were at ahead of Friday’s weaker-than-expected U.S. Non-Farm Payrolls report.

In other news, investor morale in the Euro Zone rose in May to its highest level since March 2018 on all-time high expectations and an upbeat evaluation of the current situation, a survey showed on Monday, suggesting the bloc is overcoming the COVID-19 crisis.

Sentix’s index for the Euro Zone climbed to 21.0 from 13.1 in April. A Reuters poll had pointed to a reading of 14.0.

At 10:55 GMT, the EUR/USD is trading 1.2170, up 0.0007 or +0.06%.

U.S. economic news is scarce on Monday, but FOMC Member Charles Evans is scheduled to speak at 18:00 GMT. Last week, Evans said U.S. inflation is unlikely to get out of control despite the unprecedented government spending that’s been authorized in response to the coronavirus pandemic.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend resumed earlier Monday when buyers nudged through Friday’s high. The main trend will change to down on a trade through 1.1986.

The nearest support is a short-term Fibonacci level at 1.2038, followed by a support cluster at 1.1976 to 1.1974.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Monday is likely to be determined by trader reaction to 1.2163.

Bullish Scenario

A sustained move over 1.2163 will indicate the presence of buyers. Taking out the intraday high at 1.2177 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into the February 25 main top at 1.2243.

Bearish Scenario

A sustained move under 1.2163 will signal the presence of sellers. This will put the EUR/USD in a position to form a potentially bearish closing price reversal top with the minor pivot at 1.2082 the first downside target. Since the main trend is up, buyers could come in on the first test of this level. If it fails as support then look for the selling to possibly extend into 1.2038.

Side Notes

A close under 1.2163 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.