EUR/USD Mid-Session Technical Analysis for August 7, 2017

The EUR/USD is trading higher shortly before the U.S. opening. There was no follow-through to the downside after Friday’s steep sell-off, which may have been a knee-jerk reaction to the surprisingly stronger U.S. Non-Farm Payrolls report.

In retrospect, the jobs report may have served as a reminder that the possibility of a December Fed rate hike may still be open, but today’s early price action suggests investors may be waiting for further evidence to support the U.S. Dollar’s upturn. We may not get this evidence until the release of the U.S. consumer inflation report on Friday.

Technical Analysis

The main trend is up according to the daily swing chart. Friday’s steep sell-off did nothing to the trend. All it did was make 1.1910 a new minor top. The main trend will resume on a move through 1.1910.

The short-term range is 1.1910 to 1.1727. Its retracement zone is 1.1819 to 1.1840. This zone is important to the structure of the chart pattern.

If sellers come in to stop the rally at 1.1819 to 1.1840 then a potentially bearish secondary lower top could form. This could eventually lead to a change in trend.

If enough buyers come in to take out 1.1840 then 1.1727 will become a new minor bottom.

The main range is 1.1312 to 1.1910. If there is a steep sell-off then its retracement zone at 1.1611 to 1.1540 will become the primary downside target.

Forecast

Based on the current price at 1.1791 and the early price action, the direction of the EUR/USD today is likely to be determined by trader reaction to a pair of uptrending angles at 1.1772 to 1.1798.

A sustained move over 1.1798 will indicate the presence of buyers. This could trigger a labored rally into the short-term retracement zone at 1.1819 to 1.1840. Overcoming 1.1840 will indicate the buying is getting stronger. This could lead to a test of last week’s high at 1.1910.

A sustained move under 1.1772 will signal the presence of sellers. The first target is last week’s low at 1.1727. This price is the trigger point for an acceleration to the downside with 1.1611 the near-term target.

Basically, look for an upside bias today on a sustained move over 1.1798 and a downside bias on a sustained move under 1.1772.