EUR/USD Mid-Session Technical Analysis for September 27, 2017

The EUR/USD hit its lowest level since August 18 on Wednesday as shorts continued to get squeezed out of the U.S. Dollar in reaction to the increased likelihood of a U.S. rate hike by December and to Sunday’s German election results. Profit-taking by Euro bulls is also behind the selling pressure.

On Tuesday, investors increased the likelihood of a U.S. rate hike by the end of the year to as much as 70 percent, compared to less than 20 percent only a month ago after Fed Chair Janet Yellen made somewhat hawkish remarks.

Additionally, investor sentiment toward the Euro was diminished by unexpected strength by the far-right party and the decline of traditional parties in Sunday’s German election. The results are forcing Chancellor Angela Merkel to form a coalition government.

Later today, we should see a reaction to the announcement of a tax plan by the Trump administration and Republicans in Congress. Traders will also get the opportunity to react to the latest data on Durable Goods.

Daily Technical Analysis

The main trend is down according to the daily swing chart. If the downside momentum continues then the August 17 bottom at 1.1661 will become the next target. On Friday, the EUR/USD will enter the “window of time” for a closing price reversal bottom so there is plenty of time for further weakness.

The main range is 1.1661 to 1.2092. Its retracement zone at 1.1826 to 1.1877 is new resistance.

Daily Forecast

Based on the current price at 1.1741 and the earlier price action, the direction of the EUR/USD the rest of the session will be determined by trader reaction to the uptrending angle at 1.1734.

A sustained move over 1.1734 will signal the presence of buyers. If this creates enough upside momentum, we could see a really back to resistance at 1.1806 and a resistance cluster at 1.1826 to 1.1833.

Breaking through 1.1734 and sustaining the move will indicate the presence of sellers. This could create enough downside momentum to challenge the 1.1661 main bottom.