EUR/USD Mid-Session Technical Analysis for February 28, 2020

The Euro is trading lower shortly after the U.S. opening on Friday after the single currency hit its highest level since February 4 earlier in the session. The rally this week has been fueled by speculation of a sooner-than-anticipated rate cut by the U.S. Federal Reserve in the wake of the rout in U.S. equity markets and increasing fears of a global recession.

At 12:34 GMT, the EUR/USD is trading 1.0996, down 0.0004 or -0.03%.

The EUR/USD rally began to fizzle and the Forex pair turned lower after a key market gauge of long-term Euro Zone inflation expectations fell to a record low on Friday as concerns about the spread of coronavirus intensified.

The five-year forward fell to 1.1182%, its lowest level ever. It measures expected Euro Zone inflation over a five-year period, Reuters reported.


Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. The main trend will change to up on a trade through the last main top at 1.1095. The main trend changes to down on a move through the last swing bottom at 1.0778.

The first main range is 1.1239 to 1.0778. Its retracement zone is 1.1007 to 1.1062. Today’s rally stopped inside this zone at 1.1053.

The new short-term range is 1.0778 to 1.1053. Its retracement zone at 1.0916 to 1.0883 is the next potential downside target.

Daily Technical Forecast

Based on the early price action and the current price at 1.0996, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the main 50% level at 1.1007.

Bearish Scenario

A sustained move under 1.1007 will indicate the presence of sellers. The next downside target is a downtrending Gann angle at 1.0995. This is a potential trigger point for an acceleration to the downside.

If 1.0995 fails as support then look for a potential break over the near-term into the short-term retracement zone at 1.0916 to 1.0883.

Bullish Scenario

A sustained move over 1.1007 will signal the presence of buyers. The first upside target is a downtrending Gann angle at 1.1029. Overcoming this angle will indicate the buying is getting stronger with potential upside targets coming in at 1.1053 and 1.1062.

Taking out 1.1062 could trigger a surge into a resistance cluster at 1.1095 – 1.1096.

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.