EUR/USD Mid-Session Technical Analysis for July 30, 2014

Daily EUR/USD Technical Analysis

Today’s stronger-than-expected U.S. Gross Domestic Product report is pressuring the EUR/USD at the mid-session. The market is currently testing a downtrending angle on the daily chart at 1.3370. This angle is moving down .002 per day. Crossing to the weakside of this angle will put the market in an extremely weak position.

Because of the size of the break on the daily chart, traders should focus on the weekly chart for new potential downside targets and possible support levels. From April 2013 to May 2014, the EUR/USD rallied from 1.2744 to 1.3993. This range created a retracement zone at 1.3369 to 1.3221.

The EUR/USD is currently testing the upper or 50% level of this range which puts it in a position to post a possible closing price reversal bottom because of oversold conditions. If the selling pressure continues into this zone then watch for a possible test of the November 2013 weekly bottom at 1.3295. Since this level forms inside the retracement zone, this level should be watched closely for a possible upside reversal.

Hourly EUR/USD Technical Analysis

The EUR/USD is under pressure on the hourly chart, but the recent closing price reversal bottom suggests an oversold condition and the possibility of the start of a short-covering rally.

The main trend is down on the hourly chart. This was reaffirmed when traders took out yesterday’s low at 1.3403.

Today’s range is 1.3415 to 1.3366. The closing price reversal bottom at 1.3366 will be confirmed when the market crosses 1.3382. This could lead to a short-covering rally into the retracement zone formed by this range at 1.3391 to 1.3396.

Since the main trend is down on the daily and hourly charts, watch for renewed shorting pressure, following a rally back into this zone. Taking out 1.3366 later in the session will negate the reversal bottom and this assessment. It could also lead to an acceleration to the downside into the close.

The Fed will make its announcement at 2:00 p.m. ET. Look for volatility at that time. A hawkish statement should trigger a sharp break. If the Fed issues a dovish statement, look for a short-covering rally into the close.