EUR/USD Mid-Session Technical Analysis for August 23, 2017

The EUR/USD is trading higher shortly before the U.S. opening. The range is tight and volume is low as investors continue to prepare for the start of the central bankers’ symposium at Jackson Hole, Wyoming.

U.S. Federal Reserve FOMC Member Robert Kaplan speaks today at 1305 GMT.

On August 17, Dallas Fed President Kaplan called for patience on another rate hike, saying he’d like to see more progress on inflation moving to its 2% target.

He does, however, appear to be on board with beginning paring the Fed’s balance sheet “in the near future” – i.e. September.

These comments were perceived as dovish so he is widely expected to continue down that path on Wednesday. This may put pressure on U.S. Treasury yields, giving the EUR/USD support.

Any more friendly talk about tax reform or infrastructure spending could be positive for the U.S. Dollar.

Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since August 17.

A trade through 1.1847 will change the main trend to up. This could create enough upside momentum to challenge the main top at 1.1910.

A move through 1.1661 will signal a resumption of the downtrend.

On the downside, the major support zone is 1.1611 to 1.1540.

The main range is 1.1910 to 1.1661. Its retracement zone is 1.1786 to 1.1815. This zone provided resistance on Monday and Tuesday. Its lower or 50% level at 1.1786 is currently being tested.

The short-term range is 1.1661 to 1.1828. Its retracement zone at 1.1745 to 1.1725 is providing support. Today’s intraday low fell inside this range.

Forecast

Given the current price at 1.1776 at 0942 GMT and the earlier price action, the direction of the EUR/USD the rest of the day is likely to be determined by trader reaction to the main 50% level at 1.1786.

A sustained move under 1.1786 will signal the presence of sellers. This could drive the EUR/USD back into 1.1745 to 1.1725.

The daily chart opens up to the downside under 1.1725 with 1.1661 the next major target.

A sustained move over 1.1786 will indicate the presence of buyers. This could trigger a move into the Fibonacci level at 1.1815.

Overtaking 1.1815 will indicate the buying is getting stronger. Buyers will try to claw through this week’s high at 1.1828 and into the 1.1847 main top. This is the trigger point for an acceleration to the upside with the August 2 top at 1.1910 the next major target.

Range traders may like selling into 1.1786 and buying off of 1.1745. It all depends on the volume. It’s hard to buy breakout on low volume so make sure the buying volume is rising if playing for a breakout over 1.1786, or a breakdown under 1.1745.