EUR/USD Mid-Session Technical Analysis for January 22, 2021
The Euro is inching lower against the U.S. Dollar on Friday amid a drop in demand for risky assets. Some traders are moving funds out of the stock market and into the safe-haven greenback.
Weaker than expected economic data from the Euro Zone also helped to cap gains. This came on top of dovish comments from European Central Bank President Christine Lagarde on Thursday. Traders are now awaiting the release of the U.S. Flash Manufacturing PMI and Flash Services PMI reports at 14:45 GMT.
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At 14:07 GMT, the EUR/USD is trading 1.2161, down 0.0009 or -0.08%.
Economic activity in the Euro Zone shrank markedly in January as lockdown restrictions to contain the coronavirus pandemic hit the bloc’s dominant service industry hard, a survey showed.
IHS Markit’s Flash Composite PMI, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1. A Reuters poll had predicted a fall to 47.6.
“A double-dip recession for the Euro Zone economy is looking increasingly inevitable as tighter COVID-19 restrictions took a further toll on businesses in January,” said Chris Williamson, chief business economist at IHS Markit.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 1.2054 will change the main trend to down. This should lead to a quick test of the next main bottom at 1.2025, which is a potential trigger point for an acceleration to the downside. A move through 1.2349 will signal a resumption of the uptrend.
The short-term range is 1.2349 to 1.2054. Its retracement zone at 1.2202 to 1.2236 is potential resistance. Today’s rally stopped just short of this zone at 1.2190.
The minor range is 1.2054 to 1.2190. Its 50% level at 1.2122 is the first potential downside target.
The main range is 1.1800 to 1.2349. Its 50% level at 1.2074 is controlling the near-term direction of the EUR/USD.
Daily Swing Chart Technical Forecast
The key area to watch on the upside is 1.2202 to 1.2236.
Aggressive counter-trend sellers could come in on a test of this zone. They are going to try to form a secondary lower top, which could create enough downside momentum to change the trend to down.
On the upside, overtaking 1.2236 will indicate the presence of buyers. If this move gains traction then look for a possible acceleration to the upside with 1.2349 the next likely upside target.
If today’s intraday reversal to the downside continues then 1.2122 will become the primary target.
For a look at all of today’s economic events, check out our economic calendar.