European Central Bank

EUR/USD Mid-Session Technical Analysis for July 22, 2021

The Euro is trading nearly flat while posting an inside move shortly before the key monetary policy announcements from the European Central Bank (ECB) at 11:45 GMT on Thursday. The price action indicates investor indecision and impending volatility.

No new measures are anticipated from the European Central Bank but following on from the inflation target tweak, odds have risen on policymakers promising to retain support for longer and even to add more bond-buying, Reuters noted. Dovish news from the ECB could keep the pressure on the single currency.

At 11:19 GMT, the EUR/USD is trading 1.1789, down 0.0006 or -0.05%.

“A lot of what happens today with the ECB hinges on just how much of an inflation-averaging central bank Lagarde and the press conference portray them as,” said Stephen Gallo, European head of FX strategy at BMO Capital Markets.

“The more they look willing to tolerate a significantly higher rate of inflation, the more negative it will be for the Euro, bullish for commodity and emerging market currencies versus the Euro.”

Gallo added, however, that much hinged on how much consensus there was within the governing council to extend bond-buying once pandemic-time stimulus expires in March.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, yesterday’s closing price reversal bottom suggests that momentum may be getting ready to shift to the upside.

A trade through 1.1752 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through 1.1881 will change the main trend to up.

The minor trend is also down. A trade through 1.1824 will change the minor trend to up. This will confirm the shift in momentum.

The minor range is 1.1824 to 1.1752. The Euro is straddling its pivot at 1.1788.

The second minor range is 1.1881 to 1.1752. Its pivot at 1.1817 is another potential upside target.

The short-term range is 1.1975 to 1.1752. If the minor trend changes to up then its retracement zone at 1.1864 to 1.1890 will become the next target zone.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1788.

Bullish Scenario

A sustained move over 1.1788 will indicate the presence of buyers. Taking out 1.1805 will confirm the closing price reversal bottom. Overcoming 1.1817 will indicate the buying is getting stronger and a move through 1.1824 will change the minor trend to up, signaling a shift in momentum.

A change in the minor trend to up could trigger an acceleration into the next minor top at 1.1851, followed by the short-term 50% level at 1.1864.

Bearish Scenario

A sustained move under 1.1788 will signal the presence of sellers. If this move generates enough downside momentum then look for sellers to drive the Euro into 1.1752. Taking out this level could trigger an acceleration into the March 31 main bottom at 1.1704.

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.