EUR/USD Mid-Session Technical Analysis for July 5, 2017

The EUR/USD is trading slightly lower on Wednesday as investors return to the markets after a U.S. bank holiday on Tuesday. Later today at 1800 GMT, investors will get the opportunity to react to the latest minutes from the Fed’s June monetary policy meeting.

Investors already expect the minutes to show a hawkish tone toward interest rates, but are more interested in the details about the Fed’s plan to trim its balance sheet. A more aggressive Fed will be bearish for the EUR/USD. A Fed that wants to reduce its balance sheet gradually will be friendly towards the Euro.

Technical Analysis

The main trend is up according to the daily swing chart, however, the market is in the midst of a four day correction that should lead to a 50% to 61.8% retracement of its recent rally.

A trade through 1.1445 will reaffirm the uptrend.

The main range is 1.1118 to 1.1445. Its retracement zone at 1.1282 to 1.1243 is the primary downside target.

Forecast

Based on the current price at 1.1332 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 uptrending angle at 1.1338.

A sustained move under 1.1338 will signal the presence of sellers. This could trigger an acceleration to the downside with the next potential targets a downtrending angle at 1.1285 and the 50% level at 1.1282.

We could see a technical bounce on the first test of 1.1282, but if it fails, we could see an acceleration into the Fibonacci level at 1.1243 and a pair of uptrending angles at 1.1228.

Overcoming 1.1338 will indicate the return of buyers with the next target angle coming in at 1.1365. This angle stopped the rally earlier in the session. This angle is also the trigger point for an acceleration into the next downtrending angle at 1.1405.

Watch the price action and read the order flow at 1.1338 all session. Trader reaction to this angle will tell us if the bullish investors have returned, or if the bearish investors are increasing their selling pressure.