EUR/USD Mid-Session Technical Analysis for September 14, 2020

The Euro is trading higher on Monday as a wave of M&A deals lifted the mood in global equity markets, reducing the U.S. Dollar’s appeal as a safe-haven assets, and as investors looked ahead to an event-packed week which includes a Federal Reserve meeting.

This week’s U.S. Federal Reserve meeting will be its first since Chairman Jerome Powell unveiled a policy shift towards greater tolerance of inflation, effectively pledging to keep interest rates low for longer.

At 11:34 GMT, the EUR/USD is trading 1.1876, up 0.0029 or +0.25%.

In other news, Euro Zone bond yields edged lower on Monday, with the benchmark German yield hitting -0.5% as traders digested last week’s dovish tone from European Central Bank (ECB) policymakers and looked towards the Federal Reserve’s two-day policy meeting.

Euro Zone had fallen at the end of last week after ECB chief economist Philip Lane and French central bank chief Francois Villeroy de Galhau highlighted risks from a strong currency, noting it clearly mattered for policy because it curbed price pressures.

That was after the ECB had taken an unexpectedly relaxed stance on growth and inflation at its regular policy meeting.

“Mr. Lane’s comments leave the door open for further monetary stimulus by the ECB,” Unicredit analysts said in a note.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1753 will signal a resumption of the downtrend. A move through 1.2011 will change the main trend to up.

The minor trend is up. This is generating upside momentum. A trade through 1.1917 will reaffirm the minor uptrend.

The short-term range is 1.1711 to 1.2011. Its retracement zone at 1.1861 to 1.1826 is providing support.

The minor range is 1.2011 to 1.1753. Its retracement zone at 1.1882 to 1.1912 is resistance. The upper level of this zone stopped the rally at 1.1917 last Wednesday.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the 50% levels at 1.1861 and 1.1882.

Bullish Scenario

A sustained move over 1.1861 will indicate the presence of buyers, but overtaking 1.1882 could trigger a surge into 1.1912 to 1.1917.

Bearish Scenario

A sustained move under 1.1882 will signal the presence of sellers. Crossing to the weak side of 1.1861 could trigger a sharp break into 1.1826.

Side Notes

We could be looking at a sideways trade until the Fed announcements on Wednesday. The potential range is 1.1826 to 1.1912.