EUR/USD Mid-Session Technical Analysis for September 28, 2020

The Euro is trading higher against the U.S. Dollar on Monday, tracking Euro Zone bond yields higher as investors balanced optimism about signs of a strengthening economic recovery in China with a rising tally of COVID-19 cases that could lead to more lockdown measures.

After bouncing around six-week lows for much of last week, German bond yields began this week in a similar fashion. Analysts said that much of the dovish policy tone heard from European Central bank policymakers was already priced in.

At 12:04 GMT, the EUR/USD is trading 1.1672, up 0.0041 or +0.35%.

ECB policymaker Ignacio Visco said on Sunday a recent strengthening in the Euro’s exchange rate was a worry and would warrant a reaction from the central bank if it dragged inflation further away from its goal.

Meanwhile, the U.S. Dollar weakened as U.S. stocks rebounded. The jump in demand for riskier assets helped dampen the U.S. Dollar’s appeal as a safe-haven asset.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1612 will signal a resumption of the downtrend. The main trend will change to up on a trade through the last main top at 1.1872.

The main range is 1.1371 to 1.2011. Its retracement zone at 1.1691 to 1.1616 is currently being tested. This zone is currently controlling the near-term direction of the EUR/USD.

The minor range is 1.1872 to 1.1612. Its retracement zone at 1.1742 to 1.1773 is the next 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 main Fibonacci level at 1.1616.

Bullish Scenario

A sustained move over 1.1616 will indicate the presence of aggressive counter-trend buyers. This could trigger an intraday short-covering rally into the main 50% level at 1.1691.

Overtaking 1.1691 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the minor retracement zone at 1.1742 to 1.1773 the next upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

Bearish Scenario

The inability to overcome 1.1691 will signal the return of sellers. This could lead to a pullback into 1.1616.

Taking out 1.1616 and Friday’s low at 1.1612 will indicate that the selling pressure is increasing. The daily chart indicates there is plenty of room to the downside with the July 16 bottom at 1.1371 the next potential target. Therefore, don’t be surprised by an acceleration to the downside on a break under 1.1612.