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EUR/USD Mid-Session Technical Analysis for September 25, 2020

By:
James Hyerczyk
Published: Sep 25, 2020, 11:30 UTC

The direction of the EUR/USD is likely to be determined by trader reaction to the 50% level at 1.1691 and the Fibonacci level at 1.1616.

EUR/USD

The Euro is edging lower against the U.S. Dollar after giving back earlier gains. The session started promising for the bulls after yesterday’s technical reversal bottom, but the lack of follow-through to the upside indicates that the move was likely fueled by short-covering rather than new buying.

Since Thursday’s reversal bottom was likely fueled by reports of new fiscal stimulus, today’s price action suggests that investors are expressing doubts that anything concrete will come out of next week’s expected vote on the issue.

At 11:02 GMT, the EUR/USD is trading 1.1642, down 0.0026 or -0.22%.

On Friday, EUR/USD investors will be focusing on risk sentiment since this is what drove some of the weaker short-sellers out of the market on Thursday. Traders will be watching to see if there is a follow-through rally in the stock market and whether lawmakers continue to support the notion of a vote next week by the U.S. House of Representatives on at least $2.4 trillion of fresh stimulus aid.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but yesterday’s potentially bullish closing price reversal bottom may have temporarily slowed the downside momentum.

A trade through 1.1687 will confirm the closing price reversal bottom. This will shift momentum to the upside and could lead to a 2 to 3 day counter-trend rally.

A move through 1.1627 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 1.1371 to 1.2011. The EUR/USD is currently testing its retracement zone at 1.1691 to 1.1616. Trader reaction to this area will determine the near-term direction of the Forex pair.

The new minor range is 1.1872 to 1.1627. A confirmation of the closing price reversal bottom could trigger an acceleration into its retracement zone at 1.1749 to 1.1778.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the 50% level at 1.1691 and the Fibonacci level at 1.1616. Sitting inside this range will indicate investor indecision.

Bearish Scenario

Taking out 1.1627 will negate the closing price reversal bottom and signal a resumption of the downtrend. A trade through 1.1616 will indicate the selling pressure is getting stronger. This is a potential trigger point for an acceleration to the downside.

The daily chart indicates there is plenty of room to the downside under 1.1616 with the next target a minor bottom at 1.1371.

Bullish Scenario

While holding 1.1627 will indicate that traders are respecting the closing price reversal bottom, the trigger point for a breakout to the upside is the 50% level at 1.1691. Taking out this level could trigger an acceleration into the minor retracement zone at 1.1749 to 1.1778.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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