EUR/USD Mid-Session Technical Analysis for May 12, 2021

The Euro is trading lower against the U.S. Dollar on Wednesday as some traders bet that a hotter-than-expected inflation report could force the Federal Reserve to tighten monetary policy sooner than telegraphed.

Earlier today, the U.S. Labor Department said inflation accelerated at its fastest pace in more than 12 years for April with the Consumer Price Index rising 4.2% from a year ago, compared to the Dow Jones estimate for a 3.6% increase.

At 14:24 GMT, the EUR/USD is trading 1.2090, down 0.0058 or -0.48%.

A jump in U.S. Treasury yields also made the U.S. Dollar a more attractive asset. The yield on the benchmark 10-year Treasury note rose to 1.668% shortly after the release of the data at 12:30 GMT, a gain of more than 4 basis points. The yield on the 30-year Treasury bond rose slightly to 2.367%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on May 11.

A trade through 1.2181 will negate the closing price reversal top. The main trend will change to down on a trade through 1.1986.

The new minor range is 1.1281 o 1.2072. Its 50% level at 1.2127 is resistance.

The short-term range is 1.1986 to 1.2181. The EUR/USD is currently testing its 50% level at 1.2082.

The main range is 1.2243 to 1.1704. Its retracement zone at 1.2037 to 1.1973 is the next support area.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close is likely to be determined by trader reaction to 1.2082.

Bearish Scenario

A sustained move under 1.2082 will indicate the presence of sellers. This could trigger a further decline into the main Fibonacci level at 1.2037. We could see a technical bounce on the first test of this level. If it fails then look for a potential acceleration to the downside with 1.1986 and 1.1973 the next likely downside targets.

Bullish Scenario

A sustained move over 1.2082 will signal the presence of buyers. This could trigger a late session surge into 1.2127.