EUR/USD Mid-Session Technical Analysis for November 22, 2021

The Euro is trading nearly flat on Monday in a lackluster trade as investors prepare for the start of a U.S. holiday week that could contribute to well-below average volume. Traders are showing little reaction to reports from the Euro Zone. We’re also expecting little reaction to a report on U.S. Existing Home Sales.

At 12:41 GMT, the EUR/USD is trading 1.1278, down 0.0004 or -0.04%.

Traders aren’t likely to react to economic data because their focus is on the divergence between European Central Bank (ECB) and Fed policy. Simply stated, the outlook for the EUR/USD is bearish because the ECB is dovish and the Fed is hawkish.

Last week, ECB President Lagarde reiterated that the central bank would not raise rates because the move would be too risky for the economy. Meanwhile, Fed members are talking about speeding up the pace of tapering so the central bank could raise interest rates sooner.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1250 will signal a resumption of the downtrend. A move through 1.1608 will change the main trend to up.

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 nearest support is a series of former bottoms including the July 10, 2020 main bottom at 1.1255, the July 3, 2020 main bottom at 1.1219 and the June 19, 2020 main bottom at 1.1168.

The nearest resistance is a long-term Fibonacci level at 1.1291, followed by minor 50% levels at 1.1312 and 1.1357.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Monday 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 1.1250. Taking out this level will indicate the selling pressure is getting stronger which could lead to a test of 1.1219. This level is a potential trigger point for an acceleration into 1.1168.

Bullish Scenario

A sustained move over 1.1291 will signal the short-covering is getting stronger. This could trigger a fast move into 1.1312.

Overcoming the pivot at 1.1312 could trigger an acceleration into 1.1357, followed by the minor top at 1.1374.

Side Notes

Be careful buying strength and selling weakness because of the below average volume. Don’t be surprised if traders use the long U.S. holiday weekend to take profit and cover short positions.