EUR/USD Mid-Session Technical Analysis for July 18, 2017

The EUR/USD is trading sharply higher shortly before the U.S. opening. Although investors are expecting the European Central Bank to keep its policy on hold at its monetary policy meeting on Thursday, traders are reacting to the sharp rise in the Australian Dollar after its central bank revised down the new estimate of “neutral” interest rates, or rates that are not too tight or too loose to the economy, to 3.5 percent, from around 5.0 percent.

The Euro rose because the RBA’s decision signaled that the discussion around the neutral rate can be interpreted as laying the foundation for a tightening cycle. Something the ECB is also strongly considering.

Additionally, the ECB along with other central banks like the Bank of England and the Bank of Canada are catching up with the U.S. in terms of tightening in monetary policy. This may be helping the Fed lose its advantage while at the same time driving the U.S. Dollar lower.

Technical Analysis

The main trend is up according to the daily swing chart. If the upside momentum continues then the EUR/USD should hit the May 3, 2016 main top at 1.1616 over the near-term. On the downside, the former closing price reversal top at 1.1489 is new support, followed by the former main top at 1.1445.

Since old tops tend to become new bottoms, it is important that buyers come in on retracements back to these levels or the rally will weaken.

Forecast

Based on the current price at 1.1558, the nearest support angle is 1.1518. This is followed closely by the next uptrending angle at 1.1492.

Today’s market is all about momentum so the rally should continue unless an intraday higher-high, lower-close chart pattern forms.