EUR/USD Mid-Session Technical Analysis for May 18, 2021

The Euro is surging against the U.S. Dollar on Tuesday on increased bets of a faster economic recovery in Europe and renewed expectations that the United States will not hike interest rates anytime soon.

The bullish move is being supported by comments from Dallas Federal Reserve President Robert Kaplan who on Monday reiterated his view that he does not expect interest rates to rise until next year, fueling a further decline in bets that inflationary pressure could force the Fed to act sooner.

At 11:39 GMT, the EUR/USD is trading 1.2213, up 0.0061 or +0.50%.

In other Euro related news, the European Union launched bonds on Tuesday that could complete the bulk of funding for its SURE unemployment scheme, against a tough market backdrop in which government bond yields hit multi-month highs a day ago.

Additionally, the Euro Zone economy declined by 0.6% in the first quarter of 2021, data showed on Tuesday to confirm a technical recession, as gross domestic product contracted in all larger countries except France.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Today’s trade through 1.2181 reaffirmed the uptrend. A trade through 1.2052 will change the main trend to down.

The main range is 1.2243 to 1.1704. The EUR/USD is currently trading on the bullish side of its retracement zone at 1.2037 to 1.1973, making it support.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to 1.2152.

Bullish Scenario

A sustained move over 1.2152 will indicate the presence of buyers. If this move continues to generate enough upside momentum then look for the rally to possibly extend into the February 25 main top at 1.2243. Sellers could show up on the first test of this level, but it’s also the trigger point for an acceleration to the upside with the January 6 main top at 1.2349 the next likely upside target.

Bearish Scenario

The first sign of weakness will be a break under the former main top at 1.2181. Crossing to the weak side of 1.2152 will indicate the selling pressure is getting stronger.

A close under 1.2152 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

For a look at all of today’s economic events, check out our economic calendar.