EUR/USD Mid-Session Technical Analysis for September 27, 2019

The Euro dropped to a more than two year low earlier Friday before short-covering and profit-taking pushed it higher ahead of the U.S. session opening. Traders also said that quarter-end rebalancing flows boosted demand for the greenback, while the investors remained unconcerned over the start of a formal impeachment inquiry in Washington on President Donald Trump.

At 11:20 GMT, the EUR/USD is trading 1.0936, up 0.0016 or +0.14%.

“Some corporate demand in the last few days seems to be boosting the dollar but our models show there should be net selling in the day due to rebalancing flows,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.

Nonetheless, others believed it was the strength of the U.S. economy and somewhat hawkish comments from Fed officials driving the dollar higher. Traders are now putting a limited chance on a Fed rate cut in October although a December rate cut is still a possibility.

In the meantime, in the wake of weak economic data earlier in the week from Germany, traders have upped the chances of further stimulus from the European Central Bank in December.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Thursday when sellers took out the previous main bottoms at 1.0927 and 1.0926.

The EUR/USD is now down ten sessions from its last swing chart, which puts it in a position to form a closing price reversal bottom. If confirmed, this could lead to a 2 to 3 day counter-trend rally.

Daily Technical Forecast

Based on the price action this week and the current price at 1.0937, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the downtrending Gann angle at 1.0910.

Bearish Scenario

A sustained move under 1.0910 will indicate the selling pressure is getting stronger. This angle is moving down 0.002 per day from the September 13 main top at 1.1110.

If the EUR/USD continues to follow this Gann angle lower, then it should reach the May 11, 2017 main bottom at 1.0838 around October 2 to October 3.

Bullish Scenario

A sustained move over 1.0910 will signal the presence of buyers. However, holding above Thursday’s close at 1.0920 is more important because a close above this level will produce a closing price reversal bottom and this could lead to and eventual two to three day short-covering rally.