EUR/USD Mid-Session Technical Analysis for May 4, 2020

The Euro is trading lower against the U.S. Dollar on Monday as investors flocked to the safe-haven greenback in response to rising tensions between the United States and China over who is to blame for the outbreak of coronavirus.

The Euro also fell after manufacturing activity in the Euro Zone collapsed last month as government-imposed lockdowns to stop the spread of the new coronavirus forced factories to close and consumers to say indoors, a survey showed on Monday.

IHS Markit’s Final Manufacturing Purchasing Managers’ Index (PMI) for the Euro Zone sank to 33.4 from March’s 44.5, its lowest since the survey began in mid-1997, below an earlier flash reading of 33.6 and significantly below the 50 mark separating growth from contraction.

At 11:49 GMT, the EUR/USD is trading 1.0937, down 0.0043 or -0.40%.

In other news, investor morale in the Euro Zone improved marginally in May but the assessment of current conditions hit an all-time low as the bloc faces unprecedented challenges posed by the coronavirus crisis, a survey showed on Monday.

Sentix’s index for the Euro Zone edged up to -41.8 from -42.9 in April. That compared with the Reuters consensus forecast for a reading of -33.5.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Friday when buyers traded through the previous main top at 1.0991, however, today’s price action indicates the rally stalled at 1.1018 with the formation of a new minor top. A trade through 1.0727 will change the main trend to down.

The minor trend is also up. A trade through 1.0810 will change the minor trend to down.

The Euro is currently trading inside a retracement zone at 1.0937 to 1.0987. Trader reaction to this zone could determine the near-term direction of the EUR/USD.

On the upside, potential targets are 1.0987, 1.1066 and 1.1187.

On the downside, potential targets include 1.0937, 1.0892 and 1.0831.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.0937, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the 50% level at 1.0937.

Bullish Indicator

A sustained move over 1.0937 will indicate the presence of buyers. This could lead to a labored rally with potential targets coming in at 1.0987 and 1.1018. The market starts to open up to the upside over 1.1018 with 1.1066 the next likely target.

Bearish Indicator

A sustained move under 1.0937 will signal the presence of sellers. This could trigger a further break into a 50% level at 1.0892, followed by the Fibonacci level at 1.0831.