EUR/USD Mid-Session Technical Analysis for May 28, 2021

The Euro is down on Friday but off its low as investors positioned themselves ahead of the release of a number of U.S. economic reports including the Core PCE Price Index, Personal Income and Personal Spending. All are scheduled to be released at 12:30 GMT.

The PCE is closely watched by the Federal Reserve for signs of inflation. The PCE is expected to have increased 2.9% in April year-over-year, according to economists polled by Dow Jones.

At 10:27 GMT, the EUR/USD is trading 1.2187, down 0.0006 or -0.05%.

Fed officials have this week downplayed immediate concerns about inflation prompting a knee-jerk policy response. But they – and notably influential vice chair Richard Clarida – have made a subtle shift in tone by acknowledging that the time to talk about policy changes might be approaching.

This news has encouraged some Euro bulls to trim their long positions, but most investors feel the Euro will resume the rally as Euro Zone economic data begins to reflect the strengthening recovery in the area.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2266 will signal a resumption of the uptrend. The main trend will change to down on a move through the nearest main bottom at 1.2052.

The first short-term range is 1.2052 to 1.2266. Its 50% level at 1.2159 is potential support. The second short-term range is 1.1986 to 1.2266. Its 50% level at 1.2126 is another potential support level.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Friday is likely to be determined by trader reaction to 1.2159.

Bullish Scenario

A sustained move over 1.2159 will indicate the presence of buyers. The first upside target is a minor pivot at 1.2219. Counter-trend sellers could come in on a test of this level. Overtaking it, however, could trigger a surge into the 1.2266 main top.

Bearish Scenario

A sustained move under 1.2159 will signal the presence of sellers. The first downside target is 1.2126. Look for buyers on the first test of this level. However, if it fails, we could see an acceleration to the downside with 1.2052 the next potential downside target.

Side Notes

A close under 1.2181 will form a potentially bearish closing price reversal top on the weekly chart. If confirmed, this could trigger the start of a 2 to 3 week sell-off. Watch the price action into the close. This is the key weekly support.