EUR/USD Mid-Session Technical Analysis for February 27, 2017

The EUR/USD is trading higher at the mid-session. It’s not the Euro that is stronger, but the dollar that is weaker. This may be related to position-squaring ahead of the first major speech before Congress by President Trump on Tuesday night.

However, investors are still reacting to last week’s Fed minutes that turned out to be less-hawkish than expected for a March rate hike. U.S. Treasury Secretary Steven Mnuchin also contributed to the weakness in the U.S. Dollar late last week when he said he expected Trump’s tax reform plan to get passed by Congress before its recess in August.

Traders have been pricing in Trump’s plans for economic growth, however, it looks as if all of his plans including increased fiscal spending, tax reform and relaxed regulations are likely to be delayed until later in the year.

Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at 1.0493 on February 22. A trade through 1.0493 will negate the chart pattern and signal a resumption of the downtrend.

The minor trend will turn up on a trade through 1.0617, making 1.0679 the next likely upside target.

The market is also being controlled by a pair of 50% levels at 1.0583 and 1.0606. Overtaking these levels will indicate the buying is getting stronger.

The main range is 1.0828 to 1.0493. Its retracement zone at 1.0660 to 1.0700 is the primary upside target.

The short-term range is 1.0493 to 1.0617. Its retracement zone is 1.0555 to 1.0540. This zone was the primary downside target and was tested successfully earlier today when the market reached its low at 1.0551.

Forecast

Based on the current price at 1.0580, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the 50% level at 1.0583.

Overtaking 1.0583 will indicate the presence of buyers. This could trigger a surge into the next 50% level at 1.0606. Overcoming the angle at 1.0613 and the minor top at 1.0617 will put the EUR/USD in a strong position to perhaps fuel a move into the resistance cluster at 1.0658 to 1.0660.

A failure to overcome 1.0583 will signal the presence of sellers. This could drive the market back into the support cluster at 1.0555 to 1.0553. This area provided support earlier.