EUR/USD Mid-Session Technical Analysis for October 1, 2019

The Euro hit another multi-year low against the U.S. Dollar early Tuesday as weak Euro Zone economic data continued to weigh on the single-currency, making another rate cut and further stimulus from the European Central Bank a reality. In the meantime, steady U.S. economic data and less-dovish talk from Federal Open Market Committee (FOMC) members, likely means the Federal Reserve has the luxury of passing on a rate cut in October. Both factors are contributing the most to the downfall of the Forex pair.

At 12:45 GMT, the EUR/USD is trading 1.0898, down 0.0002 or -0.02%.

“The economic divergence trade between Europe and the U.S. has become even stronger, and unless there is a clear sign of a slowdown in the U.S. economy, the dollar is expected to stay on strong footing,” said Commerzbank analyst Thu Lan Nguyen.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out the previous day’s low.

Although the EUR/USD is not in a position to change the main trend to up, it is down 12 sessions from its last main top, putting it inside the window of time for a potentially bullish closing price reversal bottom. We’ve already had the lower-low today. Now all we need is a higher close to produce this chart pattern.

A closing price reversal bottom won’t change the trend, but it could trigger a 2 to 3 day counter-trend  rally.

Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the downtrending Gann angle at 1.0870. This angle, moving down at a rate of 0.002 per day since the main top at 1.1110, has been guiding the Forex pair lower for 12 sessions.

Bearish Scenario

Crossing to the weak side of the angle at 1.0870 will put the EUR/USD in a bearish position. If it continues to follow this angle lower, then the Forex pair should hit the May 11, 2017 main bottom at 1.0838, on Wednesday or Thursday.

Bullish Scenario

A sustained move over 1.0870 will signal the presence of buyers, but more importantly, turning higher for the session will put the EUR/USD in a position to post a potentially bullish closing price reversal bottom.

Overview

Look for weakness under the angle at 1.0870. Look for strength on a sustained move over 1.0900.