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

The Euro is trading sharply lower against the U.S. Dollar on Friday after European Central Bank President Christine Lagarde said on Friday that inflation in the Euro Zone will fade so the ECB should not tighten policy as it could choke off the recovery, and hinted at continued bond purchases next year, Reuters reported.

At 12:40 GMT, the EUR/USD is trading 1.1290, down 0.0084 or -0.73%.

Inflation in the Euro Zone hit 4.1% in October, pushed up by higher energy costs, and is expected to stay above the ECB’s 2% target next year as suppliers strained by the pandemic cannot keep up with the reopening of the economy.

But Lagarde insisted the ECB should not react to the current inflation spike.

“When inflation pressure is expected to fade – as is the case today – it does not make sense to react by tightening policy,” she said. “The tightening would not affect the economy until after the shock has already passes.”

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1264 will signal a resumption of the downtrend. A move through the July 10, 2020 main bottom at 1.1255 will reaffirm the downtrend.

The minor trend is also down. A trade through 1.1374 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 1.1464 to 1.1264. Its 50% level at 1.1364 is resistance.

On the downside, the key level to watch is the long-term Fibonacci level at 1.1291. This is a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Friday is likely to be determined by trader reaction to 1.1291.

Bearish Scenario

A sustained move under 1.1291 will indicate the presence of sellers. The first downside target is the minor bottom at 1.1264. This is followed by a series of main bottoms at 1.1255, 1.1219 and 1.1168.

Bullish Scenario

A sustained move over 1.1291 will signal the presence of buyers. The first upside target is 1.1319. Sellers could come in on the first test of this level. Overcoming this resistance could trigger a late session surge into 1.1364, followed closely by 1.1374.

Taking out 1.1374 will change the minor trend to up. This could trigger an acceleration to the upside with 1.1436 the next target.