EUR/USD Mid-Session Technical Analysis for October 23, 2017

The EUR/USD is trading lower shortly before the U.S. opening. Rising U.S. Treasury yields and optimism over U.S. tax reform is behind the selling pressure along with general position-squaring ahead of Thursday’s European Central Bank’s monetary policy announcement. Traders should also be watching for a possible announcement this week of President Trump’s Fed Chair appointee.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the formation of a secondary lower top. The EUR/USD is also in a position to take out the last swing bottom at 1.1729. A trade through this bottom will change the main trend to down.

If the downside momentum picks up steam after breaking 1.1729 then the next two targets become the major 50% level at 1.1695 and the next main bottom at 1.1668.

The main range is 1.1668 to 1.1879. Its retracement zone at 1.1773 to 1.1749 is currently being tested. A sustained move under this zone will contribute to the developing downside bias.

The short-term range is 1.1879 to 1.1729. If the market recovers then look for a move into its retracement zone at 1.1804 to 1.1822.

Daily Forecast

Based on the current price at 1.1743 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 Fibonacci level at 1.1749.

A sustained move under 1.1749 will signal the presence of sellers. This could create enough downside momentum to take out the main bottom at 1.1729. This is the trigger point for an acceleration to the downside.

A sustained move over 1.1749 will indicate the presence of buyers. This could lead to a retest of the 50% level at 1.1773. Overtaking this level could trigger a further rally into the short-term retracement zone at 1.1804 to 1.1822.

If the selling volume increases then look for a move through 1.1729. If volume is below average because of the ECB meeting on Thursday then look for a mostly sideways, two-sided trade.