EUR/USD Mid-Session Technical Analysis for September 8, 2020

The Euro is trading lower against the U.S. Dollar shortly before the U.S. opening on Tuesday after the release of a report that showed the Euro Zone economy declined by slightly less than initially estimated in the second quarter. The drop was still the sharpest ever as consumer spending caved in due to COVID-19 restrictions. Traders are also on edge ahead of Thursday’s European Central Bank (ECB) meeting.

At 10:33 GMT, the EUR/USD is trading 1.1781, down 0.0033 or -0.29%.

Gross Domestic Product (GDP) fell by 11.8% from the previous quarter and by 14.7% year-on-year, data from European statistics agency Eurostat showed on Tuesday. That compared with initial estimates of respectively 12.1% and 15.0% reported at the end of July.

The contraction in the April-June period, during which COVID-19 restrictions were in place across the continent, was the steepest in a data series that began in 1995. In the first three months of this year, the contraction was already 3.7% quarter-on-quarter and 3.2% year-on-year.

Eurostat also reported that employment fell by 2.9% in the second quarter, also the sharpest decline since records began in 1995, after a 0.3% drop in the first three months of 2020.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on September 1.

A trade through 1.1754 will change the main trend to down. A move through 1.2011 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is down. The minor trend changed to down earlier today when sellers took out the last minor bottom at 1.1781. This also confirmed the shift in momentum.

The short-term range is 1.1711 to 1.2011. The EUR/USD is currently trading on the weak side of its retracement zone at 1.1826 to 1.1861.

The main range is 1.1691 to 1.1616. This zone is controlling the longer-term direction of the EUR/USD.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the Fibonacci level at 1.1826.

Bearish Scenario

A sustained move under 1.1826 will indicate the presence of sellers. Taking out the minor bottom at 1.1781 will indicate the selling pressure is getting stronger. This could trigger a break into the main bottom at 1.1754.

A trade through 1.1754 changes the main trend to down, selling up the EUR/USD for a further break into 1.1711 to 1.1691.

Bullish Scenario

Overcoming 1.1826 will signal the return of buyers. This could trigger a quick rally into the 50% level at 1.1861. This is a potential trigger point for an acceleration to the upside.

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