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EUR/USD Mid-Session Technical Analysis for February 26, 2021

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James Hyerczyk
·3 min read
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The Euro is trading lower on Friday after touching a seven-week high the previous session, pressured by a stronger U.S. Dollar, which rose in response to a surge in U.S. Treasury yields. The benchmark 10-year Treasury yield surged above 1.6% overnight for the first time in a year, after an auction of $62 billion of seven-year notes was met with weak demand.

At 14:22 GMT, the EUR/USD is trading 1.2125, down 0.0050 or -0.41%.

In other news, Euro Zone government bond yields stabilized on Friday after this week’s dramatic selloff, although Germany’s benchmark yield was still headed for its biggest monthly jump since 2016 as rising inflation expectations triggered selling of safe-haven debt.

The moves in Euro Zone yields early on Friday were more limited than in recent volatile days, however, and yields on Treasuries – which have led the selloff – dipped barely 4 basis points to 1.477% after hitting a more than one-year high on Thursday.

While rising yields have investors in the U.S. talking about the Fed tightening sooner than expected, rising yields currently seem less justified in the Euro Zone, which as a weaker economic outlook, a more depressed inflation outlook and the region arguably needs to keep borrowing costs lower for longer to secure its economic recovery.

Daily EUR/USD
Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 1.2243 will signal a resumption of the uptrend. A move through 1.1952 will change the main trend to down.

The minor trend is down. It changed to down earlier on Friday when sellers took out the minor bottom at 1.2109. This shifted momentum to the downside.

The short-term range is 1.2349 to 1.1952. The EUR/USD is currently trading on the weak side of its retracement zone at 1.2151 to 1.2197, making this area resistance.

The main retracement zone is 1.2074 to 1.2010. This area is potential support.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Friday is likely to be determined by trader reaction to 1.2151.

Bearish Scenario

A sustained move under 1.2151 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to extend into 1.2074.

Since the main trend is up, we could see a technical bounce on the first test of 1.2074. If this level fails, we could see a sharp break into 1.2023 to 1.2010.

Bullish Scenario

A sustained move over 1.2151 will signal the presence of buyers. This could trigger a surge into 1.2197. Overtaking this level will indicate the buying is getting stronger. This could extend the rally into 1.2243.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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