EUR/USD Mid-Session Technical Analysis for January 19, 2021

The Euro is trading sharply higher against the U.S. Dollar on Tuesday after posting a minor reversal to the upside the previous session. The early strength is likely being driven by renewed demand for riskier assets ahead of a key speech by U.S. President-elect Joe Biden’s nominee to run the Treasury, Janet Yellen on Tuesday and Biden’s inauguration on Wednesday.

At 11:14 GMT, the EUR/USD is trading 1.2126, up 0.0048 or +0.40%.

U.S. Treasury Secretary nominee Janet Yellen is expected to talk up the need for major fiscal stimulus and commit to a market-determined exchange rate when she testifies later in the day.

Yellen is expected to tell the Senate Finance Committee on Tuesday that the government must “act big” with its coronavirus relief package.

Biden, who will be sworn into office on Wednesday, outlined a $1.9 trillion stimulus package proposal last Thursday, saying bold investment was needed to jump-start the economy and accelerate the distribution of vaccines to bring the virus under control.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, it lost much of its recent upside momentum when rising U.S. Treasury yields increased demand for the U.S. Dollar. A trade through 1.2025 will change the main trend to down, while a trade through 1.2349 will signal a resumption of the uptrend.

The minor trend is also up. A trade through 1.2054 will change the minor trend to down. This will confirm a shift in momentum to down.

The main range is 1.1800 to 1.2349. Its 50% level at 1.2074 was straddled on Monday, but buyers managed to push the EUR/USD over this level into the close. On Tuesday, this level provided the support that may have launched the rally. The price action suggests this level may be controlling the near-term direction of the Forex pair.

The short-term range is 1.2349 to 1.2054. Its 50% to 61.8% retracement zone at 1.2202 to 1.2236 is the primary upside target. Aggressive countertrend traders could come in on the first test of this area. They will be trying to create a potentially bearish secondary lower top.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Tuesday will be determined by trader reaction to the 50% level at 1.2074.

Bullish Scenario

A sustained move over 1.2074 will indicate the presence of buyers. If this move creates enough short-term momentum then look for the rally to possibly extend into the short-term retracement zone at 1.2202 to 1.2236 later this week.

Bearish Scenario

A sustained move under 1.2074 will signal the presence of sellers. Taking out 1.2054 will change the minor trend to down and could create enough downside momentum to challenge the main bottom at 1.2025.

The main trend will change to down if 1.2025 fails as support, possibly triggering an acceleration to the downside.

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.