EUR/USD Mid-Session Technical Analysis for October 2, 2020

The Euro is trading lower on Friday with the selling fueled by safe-haven interest in the U.S. Dollar and bearish inflation news from the Euro Zone.

The single-currency dropped and the safe-haven dollar strengthened on Friday after U.S. President Donald Trump announced he tested positive for the coronavirus.

Euro Zone inflation fell deeper into negative territory last month, raising pressure on the European Central Bank to add stimulus, as an ongoing recession will keep price growth below its target for years to come.

At 11:40 GMT, the EUR/USD is trading 1.1719, down 0.0027 or -0.23%.

Annual inflation in the 19 countries sharing the Euro fell to minus 0.3% in September, its lowest in more than four years, from minus 0.2% a month earlier. That fell short of expectations for an unchanged reading, data from Eurostat showed on Friday.

More worryingly for ECB policymakers, underlying inflation, which excludes volatile food and energy costs, fell to 0.4% from 0.6%, far from the ECB’s target of almost 2%. Services inflation slowed further and the cost of imported industrial goods fell.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1612 will signal a resumption of the downtrend. The main trend will change to up on a trade through 1.1872.

The main range is 1.1371 to 1.2011. Its retracement zone at 1.1691 to 1.1616 is support.

The first short-term range is 1.1872 to 1.1612. Its retracement zone at 1.1742 to 1.1773 stopped the buying on Thursday.

The second short-term range is 1.2011 to 1.1612. Its retracement zone at 1.1811 to 1.1859 is the primary upside target area.

Daily Swing Chart Technical Forecast

Based on the early price action, the next short-term move is likely to be determined by trader reaction to the main 50% level at 1.1691.

Bullish Scenario

A sustained move over 1.1691 will indicate the presence of counter-trend buyers. The first upside target is the 50% level at 1.1742, followed by a resistance cluster at 1.1770 – 1.1773.

Bearish Scenario

A sustained move under 1.1691 will signal the presence of sellers. This could trigger an acceleration to the downside with the next target a support cluster at 1.1616 – 1.1612.

For a look at all of today’s economic events, check out our economic calendar.