EUR/USD Mid-Session Technical Analysis for August 27, 2021

The Euro is edging higher against the U.S. Dollar on Friday as investors awaited a highly anticipated speech by Federal Reserve Chair Jerome Powell, with analysts now doubting the central bank’s boss will hint when he may start to trim asset purchases.

At 12:58 GMT, the EUR/USD is trading 1.1758, up 0.0006 or +0.05%.

Analysts doubt Powell will signal when the Fed may start to cut its asset purchases just yet. The rough consensus in the market is that the Fed’s Chair will announce tapering in the fourth quarter, giving a clear signal at one meeting before the actual announcement.

A dovish Powell could face opposition at the Fed’s September 21-22 policy meeting. On Thursday, Regional Fed chiefs – Dallas’ Robert Kaplan, Kansas City’s Ester George and St. Louis’ James Bullard – downplayed the impact of the Delta coronavirus variant in separate interviews. Bullard repeated his call for the Fed to start trimming its $120 billion monthly bond purchases.

We’re going into Powell’s speech with a traditional approach. Meaning we’re not going to read too much into his comments. If he comes across as hawkish, we expect weakness in the EUR/USD. If he comes across as dovish, the EUR/USD is likely to firm.

The Fed is moving toward tapering while the European Central Bank still feels the need for stimulus. The question of “when” the tapering will start is creating the sideways trade. Therefore, there is more downside potential for the EUR/USD than upside over the long-term.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since August 20. A trade through 1.1805 will change the main trend to up. A move through 1.1664 will signal a resumption of the downtrend.

The minor trend is up. This confirms the shift in momentum. A trade through the minor top at 1.1779 will indicate the buying is getting stronger. A move through 1.1726 will change the minor trend to down.

The first minor range is 1.1726 to 1.1779. The EUR/USD is currently trading on the weak side of its pivot at 1.1752.

The second minor range is 1.1664 to 1.1779. Its retracement zone at 1.1722 to 1.1708 is the next downside target. Watch for counter-trend buyers on the first test of this area.

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 1.1752.

Bearish Scenario

A sustained move under 1.1752 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into 1.1726, followed by 1.1722 to 1.1708.

Watch for a technical bounce on the first test of 1.1722 to 1.1708. If the lower or Fibonacci level is taken out then look for a possible acceleration into the main bottom at 1.1664.

Bullish Scenario

A sustained move over 1.1752 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into 1.1779 to 1.1787. Since the main trend is down, look for sellers on the first test of this area.

Overtaking 1.1787 will put the EUR/USD in a position to change the main trend to up.

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Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.