EUR/USD Mid-Session Technical Analysis for October 5, 2020

The Euro is trading sharply higher against the U.S. Dollar on Monday as traders grew increasingly optimistic about President Trump’s release from the hospital following a bout with coronavirus and his subsequent return to the White House. Additionally, investors are also waiting for developments in talks in Washington about a coronavirus relief package after U.S. House Speaker Nancy Pelosi on Sunday reported progress in the discussions.

At 11:54 GMT, the EUR/USD is trading 1.1765, up 0.0048 or +0.41%.

In other news, the Euro Zone’s economic recovery faltered in September as the reimposition of some restrictions on activity to halt a resurgence in the coronavirus sent the bloc’s dominant service sector in reverse, a survey showed.

IHS Markit’s final composite Purchasing Managers’ Index, seen as a good barometer of economic health, falling to 50.4 in September from August’s 51.9, close to the 50 mark separating growth from contraction.

“With the Euro Zone economy having almost stalled in September, the chances of a renewed downturn in the fourth quarter have clearly risen,” said Chris Williamson, chief business economist at IHS Markit.

“Much will depend on whether second waves of virus infections can be controlled, and whether social distancing restrictions can therefore be loosened to allow service sector activity to pick up again.”

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 move through 1.1872.

The minor trend is also down. A move through 1.1770 will change the minor trend to up. This will shift momentum to the upside. The new minor bottom is 1.1696.

The main support is the retracement zone at 1.1691 to 1.1616.

The minor range is 1.1872 to 1.1612. Its retracement zone at 1.1742 to 1.1773 is currently being tested.

The short-term range is 1.2011 to 1.1612. Its retracement zone at 1.1811 to 1.1859 is the primary upside target. Trader reaction to this zone will determine the near-term direction of the EUR/USD.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the minor Fibonacci level at 1.1773.

Bullish Scenario

A sustained move over 1.1773 will indicate the buying is getting stronger. This could create the upside momentum needed to challenge the short-term 50% level at 1.1811.

Bearish Scenario

A sustained move under 1.1773 will signal the presence of sellers. This could lead to a retest of the minor 50% level at 1.1742. This is a potential trigger point for an acceleration into the minor bottom at 1.1686, followed by the main 50% level at 1.1691.

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