EUR/USD Mid-Session Technical Analysis for May 18, 2020

The Euro is trading flat to lower against the U.S. Dollar on Monday as traders reacted to a drop in bond yields. Euro Zone government bond yields fell on Monday, pulled lower with British gilt yields on growing speculation that Britain may be next to push interest rates below 0%.

At 11:53 GMT, the EUR/USD is trading 1.0823, up 0.0002 or +0.02%.

Italy’s bond market, where yields fell over 4 basis points as prices rose, was also boosted by a rally in stock markets amid a loosening of coronavirus shutdowns and signs of strong demand for a new BTP Italia bond on sale from Monday.

Germany’s 10-year bond yield was last down 1.5 basis points on the day at -0.54%. Yields on other higher-rated Euro Zone issuers were down a similar amount.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The trend will change to down on a trade through 1.0766. A move through the last main top at 1.1018 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 1.0897 will change the minor trend to up.

The main range is 1.0636 to 1.1147. Its retracement zone at 1.0831 to 1.0892 is resistance. It’s also controlling the near-term direction of the EUR/USD.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.0823, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the main Fibonacci level at 1.0831.

Bullish Scenario

A sustained move over 1.0831 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the resistance cluster at 1.0892 to 1.0897.

Bearish Scenario

A sustained move under 1.0831 will signal the presence of sellers. If this move generates enough downside momentum then look for a possible test of the minor bottom at 1.0775 and the main bottom at 1.0766. This is a possible trigger point for an acceleration into the next main bottom at 1.0727.