EUR/USD Mid-Session Technical Analysis for September 8, 2021

The Euro fell to its lowest level in a week on Wednesday, pressured by higher Treasury yields and position-squaring ahead of the European Central Bank’s (ECB) monetary policy decision on Thursday.

The benchmark 10-year Treasury note rose as high as 1.385% on Tuesday, its highest level since mid-July and a climb of almost 6 basis points from Friday’s close. Monday was a U.S. holiday.

At 13:09 GMT, the EUR/USD is trading 1.1817, down 0.0025 or -0.21%.

The focus now turns to the ECB meeting on September 9 where officials could tighten policy sooner than many expect as inflationary pressures could prove to be persistent.

The ECB has kept policy ultra-easy since the start of the coronavirus pandemic, and it promised an even longer period of accommodation when it unveiled a new strategy in July. But inflationary pressures have built quicker over the summer months than many predicted.

Analysts polled by Reuters see PEPP purchases falling possibly as low as 60 billion Euros a month from the current 80 billion, before a further fall early next year and the scheme’s end in March.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1664 will change the main trend to down. Taking out 1.1909 will signal a resumption of the uptrend.

The main range is 1.1603 to 1.1975. The EUR/USD is currently trading on the weak side of its retracement zone at 1.1820 to 1.1856, making this area new resistance.

The short-term range is 1.1664 to 1.1909. Its retracement zone at 1.1787 to 1.1758 is the primary downside target. Since the main trend is up, look for buyers on the first test of this area.

Daily Swing Chart Technical Forecast

The early price action indicates the direction of the EUR/USD into the close on Wednesday will be determined by trader reaction to 1.1820.

Bearish Scenario

A sustained move under 1.1820 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the short-term retracement zone at 1.1787 to 1.1758.

Bullish Scenario

A sustained move over 1.1820 will signal the presence of buyers. The first upside target is 1.1838, followed by 1.1856.