EUR/USD Mid-Session Technical Analysis for May 19, 2021

The Euro is trading lower on Wednesday, pressured by firming U.S. Treasury, which increased demand for the U.S. Dollar. Some traders are squaring positions and taking profits ahead of the release of the Fed minutes at 18:00 GMT. Other are reacting to the news of an acceleration in Euro Zone inflation.

At 11:45 GMT, the EUR/USD is trading 1.2199, down 0.0024 or -0.19%.

The 10-year U.S. Treasury yield topped 1.66% on Wednesday morning, ahead of the release of minutes from the Federal Reserve’s last policy meeting, later in the day.

Although the minutes are expected to reiterate that the Fed is not planning to act on policy for a long-time despite a surge in inflation, investors will still be poring over the meeting minutes for any indication as to the Fed’s views on rising inflation and when it might start to tighten its easy monetary policy.

In other news, Euro Zone inflation accelerated as expected in April because of a sharp rise in the costs of energy and services, the European Union’s statistics office Eurostat said on Wednesday.

Eurostat said consumer prices in the 19 countries sharing the Euro rose 0.6% month-on-month for a 1.6% year-on-year increase, up from 1.3% year-on-year in March.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the February 25 main top at 1.2243. A trade through 1.2052 will change the main trend to down.

The minor range is 1.2052 to 1.2245. Its 50% level or pivot at 1.2149 is the first downside target.

The main support is the retracement zone at 1.2037 to 1.1973. This zone is controlling the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to 1.2223.

Bearish Scenario

A sustained move under 1.2223 will indicate the presence of sellers. If this creates enough downside momentum then look for a break into 1.2149. Look for a technical bounce on the first test of this level.

A failure to hold 1.2149 could trigger an acceleration to the downside with 1.2052 and 1.2037 the next likely target.

Bullish Scenario

A sustained move over 1.2223 will signal the presence of buyers. Taking out 1.2245 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the January 6 main top at 1.2349 the next likely target.

Side Notes

A close under 1.2223 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.