EUR/USD Mid-Session Technical Analysis for May 21, 2021

The Euro is trading lower on Friday after an attempt to take out this week’s high failed, encouraging investors to take profits. Despite the small setback, the common currency is set to post a weekly gain.

In economic news, Euro Zone business growth accelerated at its fastest pace in over three years in May, as a strong resurgence in the bloc’s reopening service industry added to the impetus from an already-booming manufacturing sector, a survey showed on Friday.

With more businesses reopening – or at least adapting to lockdowns – IHS Markit’s flash Composite Purchasing Managers’ Index, seen as a good guide to economic health, climbed to 56.9 from April’s final reading of 53.8.

At 11:50 GMT, the EUR/USD is trading 1.2215, down 0.0011 or -0.09%.

Later today at 13:45 GMT, traders will get the opportunity to react to the latest U.S. Flash Manufacturing PMI and the U.S. Flash Services PMI. At 14:00 GMT, the U.S. will release fresh data on Existing Home Sales.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside with the formation of a closing price reversal top on May 19.

A trade through 1.2245 will negate the closing price reversal top and signal a resumption of the uptrend. Taking out 1.2160 will confirm the closing price reversal top and could trigger the start of a 2 to 3 day correction. The main trend will change to down on a trade through 1.2052.

The minor range is 1.2052 to 1.2245. Its 50% level at 1.2149 is potential support.

The major support is 1.2037 to 1.1973.

Daily Swing Chart Technical Forecast

With the EUR/USD rangebound, the direction will be determined by trader reaction to 1.2245 and 1.2149.

Bullish Scenario

A sustained move over 1.2245 will indicate the presence of buyers. This is a potential trigger point for an acceleration into the January 6 main top at 1.2349.

Bearish Scenario

A sustained move under 1.2149 will signal the presence of sellers. If this move generates enough downside momentum, we could see a 2 to 3 day correction with 1.2052 and 1.2037 the next potential downside targets.