EUR/USD Mid-Session Technical Analysis for May 15, 2018

Rising U.S. Treasury yields and the divergence between the hawkish U.S. Federal Reserve and the dovish European Central Bank is putting pressure on the Euro shortly after the U.S. opening.

At 1138 GMT, the EUR/USD is trading 1.1881, down 0.0045 or -0.37%.

The early weakness could extend later in the session if the U.S. Retail Sales report, due to be released at 1230 GMT, comes in higher than expected. There is also a Treasury auction today that should drive yields higher if there is strong demand.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1822 will signal a resumption of the downtrend.

On Monday, the EUR/USD formed a minor closing price reversal top at 1.1998. It was confirmed early today. The selling came in as the market approached the 2017 close at 1.2001. A trade through 1.1998 will negate the chart pattern, change the minor trend to up and shift momentum to the upside.

The short-term range is 1.1822 to 1.1998. Its retracement zone at 1.1910 to 1.1889. This zone is important because aggressive counter-trend buyers may try to form a potentially bullish secondary higher bottom on a test of this area.

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 short-term Fibonacci level at 1.1889.

A sustained move under 1.1889 will indicate the presence of sellers. This could trigger an acceleration to the downside with 1.1822 the next target. If this bottom fails then the selling may eventually extend into a pair of bottoms at 1.1736 and 1.1717.

A sustained move over 1.1889 will signal the presence of buyers. However, don’t expect an acceleration to the upside unless buyers can overcome the short-term 50% level at 1.1910. This could lead to an eventual retest of 1.1998.