EUR/USD Mid-Session Technical Analysis for September 23, 2020

The Euro is trading lower against the U.S. Dollar as investors continue to sell the overpriced single currency, while seeking protection in the safe-haven greenback in reaction to rising COVID-19 cases in Europe that could cause governments to impose new restrictions.

Meanwhile, Euro Zone business growth ground to a halt this month, throwing the economic recovery into question, as fresh restrictions to quell a resurgence in coronavirus infections slammed the services industry into reverse, a survey showed on Wednesday.

At 12:22 GMT, the EUR/USD is trading 1.1693, down 0.0016 or -0.14%.

The Flash PMI for the Euro Zone Service Industry plummeted to 47.6 from 50.5, significantly below the breakeven mark and falling short of even the most pessimistic forecast in a Reuters poll that had predicted a reading of 50.5.

Manufacturers fared much better, with the factory PMI climbing to a just over a two-year high of 53.7 from 51.7 and a median forecast of 51.9. While services came in below all expectations, manufacturing was above all of them.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed early in the session when sellers took out the previous day’s low. A move through the intraday low at 1.1672 will signal a resumption of the downtrend. A move through 1.1872 will change the main trend to up.

The main range in play is 1.1371 to 1.2011. Its retracement zone at 1.1691 to 1.1616 is currently being tested. The early price action suggests profit-taking or aggressive counter-trend buying is taking place on the initial test of this zone.

A new minor range has formed between 1.1872 and 1.1672. Its retracement zone at 1.1772 to 1.1796 is a potential upside target.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD is likely to be determined by trader reaction to the 50% level at 1.1691.

Bullish Scenario

A sustained move over 1.1691 will indicate the presence of counter-trend buyers. If this move is able to generate enough upside momentum then look for the move to possibly extend into the new minor 50% level at 1.1772 over the near-term.

Bearish Scenario

A sustained move under 1.1691 will signal that the selling is getting stronger. This could lead to a retest of the intraday low at 1.1672. Taking out this level could trigger an acceleration to the downside with the next major target the Fibonacci level at 1.1616.