EUR/USD Mid-Session Technical Analysis for August 9, 2021

The Euro is inching higher on Monday after recovering from early session weakness that drove the single-currency into a four-month low against the greenback amid bets for an earlier Fed taper.

The common currency likely turned on profit-taking since the fundamentals are leaning toward the bearish side. The catalyst behind the earlier pressure was strong U.S. labor market data released on Friday that encouraged investors to bring forward their bets on the Federal Reserve reducing its pandemic-era stimulus.

Traders are betting the Fed could start trimming asset purchases this year and raise rates as soon as 2022. Meanwhile, analysts and traders expect the European Central Bank (ECB) to maintain its loose policy for a long time.

At 14:09 GMT, the EUR/USD is trading 1.1756, down 0.0006 or -0.05%.

In other news, investor morale in the Euro Zone fell in August to a three-month low on a sharp drop in expectations due to concerns that new lockdown restrictions could loom in the autumn and beyond, a survey showed on Monday.

Sentix’s index for the Euro Zone fell to 22.2 points in August from 29.8 in July. A Reuters poll had pointed to an August reading of 29.0.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It was reaffirmed earlier on Monday when sellers took out the previous main bottom at 1.1752. The price action, however, suggests the move may have been fueled by sell stops rather than aggressive shorting. A trade through 1.1909 will change the main trend to up.

The short-term range is 1.1909 to 1.1743. Its retracement zone at 1.1826 to 1.1846 is the nearest resistance.

The main range is 1.1975 to 1.1743. Its retracement zone at 1.1859 to 1.1886 is controlling the near-term direction of the EUR/USD.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Monday is likely to be determined by trader reaction to 1.1762.

Bearish Scenario

A sustained move under 1.1762 will indicate the presence of sellers. Taking out the intraday low at 1.1743 will indicate the selling pressure is getting stronger. This could trigger an acceleration into the March 31 main bottom at 1.1704.

Bullish Scenario

A sustained move over 1.1762 will signal the presence of buyers. If this move is able to generate enough upside momentum then look for a potential rally into the short-term retracement zone at 1.1826 to 1.1846.

Side Notes

A close over 1.1762 will form a potentially bullish closing price reversal bottom. If confirmed, this could trigger the start of a 2 to 3 day correction.

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

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.