EUR/USD Mid-Session Technical Analysis for July 20, 2021
The Euro is trading lower against the U.S. Dollar on Tuesday as investors keep an anxious eye on the fast-spreading Delta variant of coronavirus, not the dominant strain worldwide, fearing it could stymie the global economic recovery. The United States has seen a surge in infections, especially in areas where vaccinations have lagged.
At 12:50 GMT, the EUR/USD is trading 1.1772, down 0.0029 or -0.24%.
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Thin trading conditions ahead of Thursday’s European Central Bank policy decision could be one of the reasons behind the choppy, two-sided trade we’ve been experiencing this week.
In other news, German bond yields on Tuesday fell to their lowest since February, pushing the entire German yield curve to the brink of turning negative as investors continued to snap up government bonds.
Fears around the Delta variant of the coronavirus and the continuation of position adjustments into bonds pushed both German and U.S. Treasury yields on Monday to their lowest since February, analysts said, with a 10-basis point drop in benchmark 10-year U.S. Treasury yields – the best daily performance since February – leading the way.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 1.1764 will signal a resumption of the downtrend. The main trend will change to up on a trade through 1.1881.
The minor trend is also down. A trade through 1.1851 will change the minor trend to up. This will shift momentum to the upside. Taking out 1.1764 will make 1.1824 a new minor top.
The minor range is 1.1881 to 1.1764. Its 50% level at 1.1823 is resistance. This level will move down as the EUR/USD moves below 1.1764.
The short-term range is 1.1975 to 1.1764. Its retracement zone at 1.1873 to 1.1898 is key resistance. It’s also controlling the near-term direction of the single-currency.
Daily Swing Chart Technical Forecast
The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to 1.1764.
Bearish Scenario
A sustained move under 1.1764 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for the selling to possible extend into the March 31 main bottom at 1.1704.
Bullish Scenario
A sustained move over 1.1764 will signal the presence of buyers. The inability to take out this level could trigger a short-covering rally into the resistance cluster at 1.1823 – 1.1824, followed by the minor top at 1.1851.
Side Notes
Taking out 1.1764 then closing over 1.1800 will form a potentially bullish closing price reversal bottom. If confirmed, this could trigger the start of a 2 to 3 day correction.