EURUSD Mid-Session Technical Analysis for March 13, 2020

The Euro is trading flat against the U.S. Dollar while remaining inside yesterday’s wide range. The price action indicates investor indecision and impending volatility. The subdued move in the single-currency was likely a reaction to the volatile Euro Zone government bonds trade.

Euro Zone government bond yields rose again on Friday after Thursday’s sell-off, when the European Central Bank disappointed markets with its measures to contain the effects of the coronavirus.

At 12:11 GMT, the EUR/USD is trading 1.1162, down 0.0013 or -0.12%.

Italian yields briefly rose to their highest since July, before falling back as policymakers sought to calm investors’ fears. German bond yields also rose. Analysts said that investors were being forced to sell even safe-haven bonds to maintain liquidity.

Traders said a comment by ECB President Christine Lagarde on Thursday that the central bank was not there to “close spreads” hit peripheral government bond markets hard, especially Italy’s.

ECB policymakers shifted to damage control on Friday, with chief economist Philip Lane saying they would “not tolerate any risks to the smooth transmission of our monetary policy in all jurisdictions of the euro area”.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 1.1496 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 1.0778.

The minor trend is down. It turned down on Thursday when sellers took out the last minor bottom at 1.1096. This also shifted momentum to the downside. The minor downtrend will resume when sellers take out 1.1056.

The main range is 1.0778 to 1.1496. Its retracement zone at 1.1137 to 1.1052 is support. This zone stopped the selling on Thursday at 1.1056.

The minor range is 1.1496 to 1.1056. Its retracement zone at 1.1276 to 1.1328 is the next upside target zone. This zone will determine the near-term direction of the EUR/USD. Aggressive counter-trend sellers could come in on a test of this zone. They will be trying to form a secondary lower top.

Daily Technical Forecast

Based on the early price action and the current price at 1.1162, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the steep downtrending Gann angle at 1.1176.

Bearish Scenario

A sustained move under 1.1176 will indicate the presence of sellers. The first target is the 50% level at 1.1137, followed by an uptrending Gann angle at 1.1098 and the Fibonacci level at 1.1052. Since the main trend is up, anyone of these levels could draw the attention of buyers.

The Fibonacci level at 1.1052 is a potential trigger point for an acceleration to the downside. Sellers could come in hard under this Gann angle with the next target angle coming in at 1.0938.

Bullish Scenario

A sustained move over 1.1176 will signal the presence of buyers. This could trigger an acceleration to the upside with the next target the short-term 50% level at 1.1276, followed by a resistance cluster at 1.1328 to 1.1336.