EUR/USD Mid-Session Technical Analysis for October 12, 2020

The Euro is trading lower against the U.S. Dollar on Monday after a speech by European Central Bank President Christine Lagarde and the World Health Organization urged governments to restrict activity to combat a rapid rise in COVID-19 infections. The U.S. Dollar was also being underpinned as traders expressed concerns over the timing of the next fiscal stimulus deal.

In other news, speculators cut their Euro long positions to a two-month low in the week to October 6, weekly CFTC data showed.

At 15:16 GMT, the EUR/USD is trading 1.1813, down 0.0016 or -0.14%. The Forex pair is also posting an inside move that suggests investor indecision and impending volatility.

The European Central Bank moved a step closer to exploring the creation of a virtual currency, after president Christine Lagarde said on Monday it was “very seriously considering” a digital Euro.

At a virtual meeting hosted by the International Monetary Fund, Lagarde said:  “The ECB is very seriously looking at a digital Europe.”

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 1.1872 will change the main trend to up. A move through 1.1612 will signal a resumption of the downtrend.

The minor trend is up. A trade through 1.1725 will change the minor trend to down. A move through 1.1831 will indicate the buying is getting stronger.

The short-term range is 1.2011 to 1.1612. Its retracement zone at 1.1811 to 1.1859 is currently being tested. This zone is controlling the near-term direction of the EUR/USD.

Another short-term range is 1.1872 to 1.1612. Its retracement zone at 1.1773 to 1.1742 is potential support.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD into the close is likely to be determined by trader reaction to the 50% level at 1.1811.

Bullish Scenario

A sustained move over 1.1811 will indicate the presence of buyers. The first upside target is 1.1831, followed by a Fibonacci level at 1.1859. This is the last potential resistance level before the 1.1872 main top.

Bearish Scenario

A sustained move under 1.1811 will signal the presence of sellers. This could trigger a break into the Fibonacci level at 1.1773, followed by the 50% level at 1.1742.