EUR/USD Mid-Session Technical Analysis for September 5, 2019

The Euro is trading sharply higher against the U.S. Dollar for a second session after Wednesday’s comments from Christine Lagarde, the European Central Bank’s (ECB) likely next president, suggested the ECB would not likely be as aggressive in its policy moves at its next meeting as previously thought.

Lagarde said the ECB needs to keep policy loose for a long time but should carry out a broader review of policy that also takes into account global challenges like climate change.

At 14:20 GMT, the EUR/USD is trading 1.1065, up 0.0030 or +0.27%.

In a speech in Brussels, Lagarde largely avoided commentary on current policy but argued that a prolonged period of ultra-easy policy is necessary given global challenges, weak growth and uncomfortably low inflation.

She added, however, that the ECB should also be mindful of the negative side effects of unconventional measures.

Today’s earlier losses were limited by better-than-expected ADP Private Sector jobs data that may be an early indication that Friday’s Non-Farm jobs report will be stronger than previously expected.

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside with the formation of the closing price reversal bottom at 1.0926 on September 3.

A trade through 1.0926 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through 1.1164 will change the main trend to up.

The short-term range is 1.1164 to 1.0926. Its retracement zone at 1.1045 to 1.1073 is currently being tested. This zone is controlling the near-term direction of the EUR/USD.

The major retracement zone resistance is the long-term Fibonacci level at 1.1185.

Daily Technical Forecast

Based on the early price action and the current price at 1.1065, the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to the downtrending Gann angle at 1.1084.

Bearish Scenario

A sustained move under 1.1084 will indicate the presence of sellers. Crossing to the weak side of the short-term Fibonacci level at 1.1073 will indicate the selling is getting stronger. This could trigger a further break into the short-term 50% level at 1.1045.

Taking out 1.1045 could drive the EUR/USD into the uptrending Gann angle at 1.1006.

Bullish Scenario

A sustained move over 1.1084 will signal the presence of buyers. This is a potential trigger point for an acceleration to the upside with the next target angle coming in at 1.1124. This may be the last potential resistance angle before the 1.1164 main top.