EUR/USD Mid-Session Technical Analysis for May 19, 2017

The EUR/USD is trading higher at the mid-session as investors continue to respond to the easing of political risk and talk about the European Central Bank winding back its expansive monetary stimulus program as the Euro Zone economy recovers.

Earlier today, German PPI came in higher than expected at 0.4%, beating the 0.2% estimate. The Euro Zone Current Account came in at 34.1 billion versus a 32.3 billion estimate. However, this was down from the previous 37.8 billion. Finally, the CBI Industrial Order Expectations report posted a reading of 9 against a forecast of 4.

There are no major U.S. reports today, but investors are still on edge over the situation in Washington, President Trump’s ability to run the government and his ability to push through his economic agenda. This is also weighing on Treasury yields while reducing the odds of future rate hikes by the Fed. Both pieces of news are capping gains on the U.S. Dollar while pushing it to multi-month lows.

Technical Analysis

The main trend is up according to the daily swing chart. Yesterday, the EUR/USD posted a potentially bearish closing price reversal top. The chart pattern was never confirmed and the chart pattern was negated earlier today when the market took out yesterday’s high at 1.1174.

The next major upside target is the November 9, 2016 top at 1.1299. The nearest swing bottom comes in at 1.0839.

Forecast

The EUR/USD is currently trading at 1.1177. The upside momentum suggests traders are likely to make a run at the next long-term downtrending angle at 1.1212. We could see a technical bounce on the first test of this angle, but it is also the trigger point for another acceleration into the main top at 1.1299.

The nearest support is another long-term downtrending angle at 1.1128. Crossing back below this will indicate the presence of sellers. This could drive the market into the steep uptrending angle at 1.1019.

Look for a steep sell-off to begin if 1.1019 is taken out with conviction.