EUR/USD Mid-Session Technical Analysis for October 31, 2017

The EUR/USD is trading slightly lower on Tuesday shortly before the U.S. opening. The Forex pair is also trading inside yesterday’s range which tends to suggest investor indecision and impending volatility. Basically, it looks like the market is going through a consolidation following last week’s steep sell-off.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1573 will signal a resumption of the downtrend. The Forex pair isn’t in a position to change the main trend to up, but conditions are right for a rally into a retracement zone.

The EUR/USD is also trading inside a long-term retracement zone bounded by 1.1610 to 1.1702.

The short-term range is 1.1836 to 1.1573. Its retracement zone at 1.1705 to 1.1736 is the primary upside target.

The combination of the two retracement zones forms a resistance cluster at 1.1702 to 1.1705. Since the main trend is down, sellers are likely to re-emerge on a rally into the cluster.

A long-term downtrending angle also passes through the short-term retracement zone at 1.1722, making it a valid upside target.

Daily Forecast

Based on the current price at 1.1641 and the earlier price action, the direction of the EUR/USD today is likely to be determined by trader reaction to the major Fibonacci level at 1.1610.

A sustained move over 1.1610 will indicate the presence of buyers. If this creates enough upside momentum, we could see a move into 1.1702 to 1.1705. Look for sellers to return on a test of this area.

A sustained move under 1.1610 will signal the presence of sellers. The first downside target is last week’s low at 1.1573. This is a potential trigger point for an acceleration to the downside with the next target angle 1.1523.

The direction of the EUR/USD will be determined by momentum and the early price action suggests the absence of momentum due to concerns over the Fed’s monetary policy decision on Wednesday and President Trump’s appointment of a new Fed chair on Thursday.