EUR/USD Mid-Session Technical Analysis for October 2, 2018

Problems with the finances in Italy continue to dog the Euro on Tuesday. The selling pressure has driven the single-currency into a key retracement zone and now it’s up to speculative buyers to stop the price slide, or the market is likely to begin accelerating to the downside if this support area is breeched.

Fundamentally, things are heating up between Italian and Euro Zone officials. According to reports, Italian Deputy Prime Minister Luigi Di Maio accused European Union officials of deliberately upsetting financial markets with negative comments about Italy’s budget plans.

He was taking aim at European Economic Affairs Commissioner Pierre Moscovici, who earlier said that Rome’s plans were “obviously” deviating from EU rules on fiscal discipline.

At 1016 GMT, the EUR/USD is trading 1.1519, down 0.0060 or -0.52%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The main trend turned down on a trade through 1.1526. The EUR/USD isn’t in a position to change the main trend to up, but it is inside the window of time for a closing price reversal bottom.

The main range is 1.1301 to 1.1816. The Forex pair is currently testing its retracement zone at 1.1559 to 1.1498. Trader reaction to this zone could determine the near-term direction of the EUR/USD.

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Daily Technical Forecast

Based on the early price action and the current price at 1.1519, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the Fibonacci level at 1.1498.

Holding 1.1498 could be an early indication that counter-trend buyers are coming in to stop the price slide. If this move picks up momentum then look for a drive into the 50% level at 1.1559, followed by a steep downtrending Gann angle at 1.1576.

Overtaking 1.1576 could shift momentum to the upside since this angle has been guiding the EUR/USD lower since the top at 1.1816 on September 24.

A sustained move under 1.1498 will indicate the selling is getting stronger. This could drive the Euro into the next uptrending Gann angle at 1.1471. Watch for a technical bounce on the first test of this level. If it fails then we could see an acceleration to the downside with the next major target angle coming in at 1.1311. This is the last potential support angle before the 1.1301 main bottom.