EUR/USD Mid-Session Technical Analysis for September 21, 2017

The EUR/USD is recovering slightly following yesterday’s sharp sell-off. The selling was driven by the U.S. Federal Reserve which sounded more hawkish than expected in its monetary policy statement.

The central bank left its benchmark interest rate unchanged and laid out new details of its plan to begin trimming its balance sheet in October as expected. The Fed surprised traders by saying it expects to raise interest rates a third time before the end of the year.

Despite rising Treasury yields which tend to make the U.S. Dollar a better investment, losses by the EUR/USD could be limited because next month the European Central Bank is widely expected to announce it will begin reducing stimulus.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside on Wednesday with the formation of the daily closing price reversal top. A trade through 1.1860 will confirm the potentially bearish chart pattern.

A trade through 1.1837 will change the main trend to down. This is followed by another main bottom at 1.1823 which may be the trigger point for an acceleration to the downside with 1.1661 the next likely downside target.

The main range is 1.1661 to 1.2092. Its retracement zone at 1.1877 to 1.1826 is currently acting like support. If it fails to hold as support then look for the selling to get more aggressive.

The short-term range is 1.2092 to 1.1837. Its retracement zone at 1.1965 to 1.1995 is the primary upside target and resistance zone.

Daily Forecast

Based on the current price at 1.1896 and the earlier price action, the direction of the EUR/USD today is likely to be determined by trader reaction to the downtrending angle at 1.1912 and the uptrending angle at 1.1862.

Holding between 1.1862 and 1.1912 will lead to a sideways trade.

Look for an upside bias to develop on a sustained move over 1.1912. This move could eventually create enough upside momentum to eventually challenge the short-term 50% level at 1.1965.

Look for the downside momentum to continue on a sustained move under 1.1862. This could drive the market into the bottom at 1.1837, the main Fibonacci level at 1.1826 and the next main bottom at 1.1823.

The trigger point for another steep break is 1.1823. If this price fails then look for a move into the longer-term uptrending angle at 1.1786.

Look for a bullish tone over 1.1912 and a bearish tone under 1.1862.