EUR/USD Mid-Session Technical Analysis for February 22, 2017

Support for the EUR/USD continued to erode early Wednesday with the Forex pair taking out its February 15 bottom on its way to testing its lowest level since January 11. Some traders were positioning themselves ahead of the release of the minutes from the Federal Reserve’s monetary policy meeting in early February at 1900 GMT, but the main reason was increasing political concerns in France.

Leading the Euro lower are market concerns about the anti-European Union rhetoric from French presidential candidate Marine Le Pen ahead of the first round of French elections on April 23. She wants France to pull out of the Euro Zone and also hold a referendum for the country to leave the European Union.

Investors are concerned that Le Pen’s popularity is gaining in the polls. Recent poll shows she is slowing closing the gap between her and front-runners Emmanuel Macron and Francois Fillon.

Technical Analysis

The main trend is down according to the daily swing chart. The downtrend resumed earlier in the session when sellers took out the February 15 main bottom at 1.0521. The move also negated the closing price reversal bottom that had held up the market for four sessions.

The next downside target is a minor bottom at 1.0453 and the main bottom at 1.0339.

The main range is 1.0339 to 1.0828. Its retracement zone is 1.0583 to 1.0526. Crossing to the weak side of this zone has also put the EUR/USD in a bearish position.

Forecast

Based on the current price at 1.0505, the direction of the EUR/USD is likely to be determined by trader reaction to the uptrending angle at 1.0519.

A sustained move under 1.0519 will signal the presence of sellers. The daily chart shows the market is wide open to the downside with the next target the January 11 low at 1.0453. This is followed by another uptrending angle at 1.0429. This is the last potential support angle before the 1.0339 main bottom reached on January 3.

Overtaking 1.0519 will indicate the presence of buyers. However, don’t expect an acceleration to the upside unless the buying is strong enough to overtake the major Fibonacci level at 1.0526.