EUR/USD Mid-Session Technical Analysis for September 20, 2021
The Euro is under pressure on Monday as weaker commodity prices, worries about Chinese property company Evergrande and caution ahead of this week’s U.S. Federal Reserve meeting pressured stocks and boosted safe-haven demand for the U.S. Dollar.
The major concern for global investors is the Evergrande issue. Not only are investors worried about what the stress from Evergrande will mean for China’s economy and its growth prospects, but whether this is the start of something major that could spread to the global financial markets.
Basically, the fear of contagion is driving investors into the safety of the U.S. Dollar. Investors learned from the Euro Zone crisis and the credit market meltdowns over a decade ago that where’s there’s smoke, there’s fire and that it’s better to trim speculative positions now rather than wait for conditions to worsen.
At 12:40 GMT, the EUR/USD is trading 1.1712, down 0.0013 or -0.11%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 1.1664 will change the main trend to down. A move through 1.1909 will signal a resumption of the uptrend.
The minor trend is down. This is controlling the momentum. A trade through 1.1846 will change the minor trend to up.
The short-term range is 1.1664 to 1.1909. The EUR/USD is currently trading on the weakside of its retracement zone at 1.1758 to 1.1787, making it new resistance.
Daily Swing Chart Technical Forecast
The direction of the EUR/USD on Monday is likely to be determined by trader reaction to 1.1725.
A sustained move under 1.1725 will indicate the presence of sellers. Taking out the intraday low at 1.1700 will indicate the selling pressure is getting stronger. This could trigger an acceleration into the last main bottom at 1.1664.
The trend changes to down on a trade through 1.1664. This could extend the selling into the November 4, 2020 bottom at 1.1603.
A sustained move over 1.1725 will signal the presence of buyers. This could trigger an intraday rally into the retracement zone at 1.1758 to 1.1787, which is new resistance. Since the main trend is down, sellers could return on the first test of this area.