U.S. Markets closed

EUR/USD Mid-Session Technical Analysis for August 23, 2019

James Hyerczyk

The Euro is trading lower against the U.S. Dollar shortly after the U.S. opening on Friday, and ahead of the highly anticipated speech by Federal Reserve chief Jerome Powell. The single-currency is being pressured by uncertainty leading up to the speech and hawkish comments on Thursday by two Fed policymakers who signaled their reluctance to provide more stimulus to the economy.

At 11:31 GMT, the EUR/USD is trading 1.1056, down 0.0024 or -0.22%.

The markets have priced in a 25-basis point rate cut for September and as many as four more over the next 12 months. Powell is going to have to match or exceed these expectations in order to satisfy investors. If he comes across as dovish then the Euro could rebound, but he has to deliver a message with enough clarity and conviction to convince the market that the Fed is serious about perking up the economy and preventing a global recession.

If Powell reiterates the Fed’s “mid-cycle adjustment” narrative or comes across as hawkish then the EUR/USD could drop further.


Daily Technical Analysis

The main trend is down according to the daily swing chart. The next target is the August 1 main bottom at 1.1027. A trade through 1.1113 will change the main trend to up.

The short-term range is 1.1027 to 1.1250. Its retracement zone at 1.1112 to 1.1139 is resistance. The major resistance is the long-term Fibonacci level at 1.1185.

Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the uptrending Gann angle at 1.1067.

Bearish Scenario

A sustained move under 1.1067 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the next main bottom at 1.1027. Taking out this bottom will further confirm the downtrend and could lead to a test of the downtrending Gann angle at 1.0990. Crossing to the weak side of this angle will put the EUR/USD in an extremely bearish position. This could lead to an eventual test of the May 11, 2017 main bottom at 1.0838.

Bullish Scenario

A sustained move over 1.1067 will signal the presence of buyers. This could lead to a test of a cluster of resistance at 1.1107, 1.1112 to 1.1114 and 1.1120.

Taking out 1.1120 could trigger a spike into 1.1139, followed by a downtrending Gann angle at 1.1152. This is a potential trigger point for an acceleration into the next resistance cluster at 1.1185.

This article was originally posted on FX Empire