EUR/USD Mid-Session Technical Analysis for December 20, 2016

The EUR/USD is trading lower at the mid-session. It is currently at 1.0375, rapidly approaching last week’s low at 1.0366, which was its weakest level since January 2003.

The Euro is being pressured by a number of factors. The U.S. Dollar is rebounding back towards its 14-year high reached last week. The Greenback is being supported by the Fed’s recent hawkish moves and yesterday’s upbeat comments from Fed Chair Janet Yellen.

Also helping to pressure the single-currency is the Bank of Japan’s decision to keep monetary policy unchanged. Traders are also watching to see if the incidents in Turkey and Germany on Monday escalate into major economic events that require a flight to safety response.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0670 will turn the main trend to up. A move through 1.0366 will signal a resumption of the downtrend.

The short-term range is 1.0670 to 1.0366. Its 50% level or pivot is 1.0518. This level is controlling the short-term direction of the market.

The main range is 1.0872 to 1.0366. Its pivot target is 1.0619.

Forecast

Based on the current price at 1.0380 and the intraday downside momentum, the first downside target is the December 15 low at 1.0366. If this price is taken out with conviction then look for the selling to extend into the steep downtrending angle at 1.0232. Crossing to the weak side of this angle will put the market in an extremely bearish position.

On the upside, the next two targets are 1.0518 and 1.0552.

The main trend is down as well as the intraday trend so the chances are great that sellers will try to take out last week’s 13 year low at 1.0366. How traders react to this price will be determined by the volume. It’s pretty light right now. I expect to see the selling pressure intensify if this level is taken out, but I will also be watching for a failure. You have to be careful when selling weakness on light volume.

Trade the trend, but we aware of the potential for counter-trend volatility spikes.

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