EUR/USD Mid-Session Technical Analysis for August 25, 2017

The EUR/USD is trading higher at the mid-session on Friday. The volume is still light, but there seems to be an upside bias developing. We suspect its position-squaring ahead of the U.S. Durable Goods report at 1230 GMT and speeches by Fed Chair Janet Yellen at 1600 GMT and ECB President Mario Draghi at 1900 GMT.

Core Durable Goods Orders are expected to come in at 0.4%. Durable Goods Orders are forecast to decline 6.0%.

Better-than-expected Durable Goods Orders could underpin U.S. Treasury yields and the U.S. Dollar.

At Jackson Hole on Friday, most investors don’t anticipate any major statements on increasing interest rates from Yellen or Draghi. Speaking late in the session on Friday leaves very little time for investors to react to anything the two central bankers say. Because of the thin trading conditions, any moves are likely to be exaggerated also. We may not see any real reaction to the speeches until early next week.

Going into the speeches, market expectations for a rate hike in December are just 37.6 percent, according to the CME Group’s FedWatch tool. This is actually bullish for the EUR/USD.

Unless Yellen or Draghi say something important pertaining to policy, I don’t expect much of a reaction in the Forex markets. We could, however, have some wild swings because of thin trading conditions. Volume is expected to remain light until after the September 4^th, U.S. Labor Day holiday. Try not to get whip-sawed.

Technical Analysis

The main trend is down according to the daily swing chart. The trend will turn up on a trade through 1.1847. The downtrend resumes on a trade through 1.1661.

The intermediate range is 1.1910 to 1.1661. Its retracement zone is 1.1786 to 1.1815. This zone has been action like resistance all week.

The short-term range is 1.1661 to 1.1828. Its retracement zone at 1.1745 to 1.1725 has been acting like support.

Forecast

Based on the current price at 1.1816, the direction of the EUR/USD is likely to be determined by trader reaction to the Fibonacci level at 1.1815.

A sustained move over 1.1815 will indicate the presence of buyers. This could create the upside momentum needed to challenge 1.1847. Taking out this level could trigger an acceleration into the next main top at 1.1910.

A sustained move under 1.1815 will signal the presence of sellers. This could drive the market into the 50% level at 1.1786.

The 50% level at 1.1786 is the trigger point for an acceleration to the downside with the next target zone 1.1745 to 1.1725. Look for another steep sell-off if 1.1725 fails as support. This could drive the market into 1.1661.

The major support target is 1.1611 to 1.1540.