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

The EUR/USD is trading slightly better shortly before the U.S. opening. The Forex pair is also trading inside yesterday’s range, which typically indicates investor indecision and impending volatility. This is likely because the major players are sitting on the sidelines ahead of Wednesday’s U.S. Federal Reserve interest rate decision and monetary policy statement.

The Fed is widely expected to leave rates unchanged. The CME Fed Watch Tool indicates there is about a 3.1% chance of a rate hike. Traders will be watching the report for clues as to whether the central bank feels the economy is strong enough to warrant a third rate hike before the end of the year.

Technical Analysis

The main trend is up according to the daily swing chart. However, yesterday’s closing price reversal top suggests momentum may be getting ready to shift to the downside.

A trade though yesterday’s low at 1.1625 will confirm the chart pattern. Although this won’t indicate the trend is changing, this formation often leads to the start of a 2 to 3 day correction equal to about 50% of the last swing up.

A move through 1.1684 will negate the chart pattern and signal a resumption of the uptrend with the next target the August 24, 2015 top at 1.1712.

The short-term range is 1.1312 to 1.1684. Its 50% level or pivot is 1.1498. If there is a sell-off then this pivot will become the primary downside target.

Forecast

Based on the current price at 1.1651, the upside targets are 1.1684 and 1.1712.

On the downside, the first target angle comes in at 1.1618. This is followed by a short-term uptrending angle at 1.1592. We could see an acceleration to the downside if this angle fails and the selling volume is better than average. This would put the EUR/USD in a position to continue the move into the primary target at 1.1498.