EUR/USD Mid-Session Technical Analysis for January 24, 2017

A turnaround in the U.S. Dollar is helping to put pressure on the Euro on Tuesday. Traders may be reacting to German Flash Services PMI which came in lower than expected. Later today, the U.S. reports Flash Manufacturing PMI, Existing Home Sales and the Richmond Manufacturing Index.

I think the actions by Trump on Monday may turn into a buy the rumor sell the fact situation.  Withdrawing from the Trans-Pacific Partnership and the renegotiation of NAFTA were two campaign promises that were probably built into the market so yesterday’s price action could have been a “blow-off” move.

The move by the EUR/USD may also be related to a U.K. Supreme Court ruling that said the government needs parliamentary approval to trigger formal talks about the country’s exit from the European Union.

Technical Analysis

The main trend is up according to the daily swing chart. However, the intraday reversal to the downside suggests the selling may be greater-than-the-buying at current price levels. A lower close today will form a potentially bearish closing price reversal top. If it forms and is confirmed on Wednesday then look for momentum to shift to the downside.

A trade through 1.0772 will signal a resumption of the buying with the December 8 top at 1.0872 the next likely target.

The main range is 1.0872 to 1.0339. The first downside target is its retracement zone at 1.0668 to 1.0606. If a short-term range forms between 1.0339 and 1.0772 then look for an eventual pullback into its retracement zone at 1.0556 to 1.0504.

Forecast

Based on the current price at 1.0736 and the earlier price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the downtrending angle at 1.0717.

Holding above 1.0717 will indicate that buyers are coming in to defend the trend. If it creates enough upside momentum then look for a possible drive into the intraday high at 1.0772 and the downtrending angle at 1.0795.

Taking out the downtrending angle at 1.0717 will signal the presence of sellers. This could trigger an acceleration to the downside with the first target the Fibonacci level at 1.0668. This is followed by a major uptrending angle at 1.0639.

Currently the intraday momentum is to the downside, but the direction the rest of the day will be determined by trader reaction to the angle at 1.0717.