EUR/USD Mid-Session Technical Analysis for September 3, 2020

The Euro is trading lower against the U.S. Dollar on Thursday but clawing back some of its earlier losses. The current three day sell-off has essentially erased all of the gains attributed to the major policy shift by the Fed announced a week ago. You know the one that is supposed to keep U.S. rates at or near historical lows for a long time. The policy shift that is expected to drive the U.S. Dollar sharply lower.

Well that train of thought has been blasted by technical traders who said the Euro was over-extended to the upside, and by shrewd fundamental traders who noticed that Euro Zone inflation was negative in August.

So now the European Central Bank (ECB) is going to have to figure out how to get inflation back to positive, while the Fed is trying to get inflation at and over 2.0%. So which is the stronger economy now, the Euro Zone or the United States?

At 10:37 GMT, the EUR/USD is trading 1.1820, down 0.0036 or -0.30%.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The trend will change to down on a trade through 1.1754, while a move through 1.2011 will signal a resumption of the uptrend.

The short-term range is 1.1711 to 1.12011. Its retracement zone at 1.1861 to 1.1826 is the primary focus today.

Daily Technical Forecast

The current three day break started with the closing price reversal top on September 1 at 1.2011. This chart pattern often triggers the start of a 2 to 3 day break and/or a 50% to 61.8% retracement of the last rally.

The sell-off has led to a test of the expected zone and even more. But this is the area to focus on today.

The short-term retracement zone at 1.1826 to 1.1861 is now resistance. Inside this zone is a downtrending Gann angle at 1.1851.

A sustained move under the Gann angle at 1.1851 will indicate the presence of sellers. Taking out 1.1826 will indicate the selling pressure is getting stronger with 1.1754 the next downside target.

Overtaking the downtrending Gann angle at 1.1851 will signal the return of buyers, but they will have to overcome the 50% level at 1.1861 to trigger an acceleration to the upside. If they do then look for a possible rally into the next downtrending Gann angle at 1.1931 over the short-run.