EUR/USD Mid-Session Technical Analysis for June 4, 2020

The Euro is slipping ahead of a European Central Bank (ECB) meeting at which policymakers could step up stimulus measures.

The ECB is expected to increase the size of its 750 billion Euro ($840 billion) Pandemic Emergency Purchase Programme (PEPP) to support Europe’s weakest economies – although some investors think this will happen at July’s meeting rather than today.

The Euro has gained around 3.6% versus the dollar since France and Germany proposed an EU-wide recovery fund to share the cost of the coronavirus crisis on May 18.

At 11:43 GMT, the EUR/USD is trading 1.1201, down 0.0032 or -0.28%.

Traders should brace for the possibility of a volatile two-sided trade. There is potential for market disappointment today as traders expect the ECB to increase the PEPP programme. If they do not, profit-taking is likely to intensify, sending the Euro lower.

According to Reuters, one argument against the ECB announcing more policy easing on Thursday is the slow progress in the European Union’s efforts to finalize its recovery fund proposal. The ECB could hold out to keep up pressure on EU political leaders.

Any further gains for the Euro could be limited by a large amount of positive economic news already being priced in by investors.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1258 will signal a resumption of the uptrend.

The main trend will change to down on a trade through 1.0871. This is highly unlikely on Thursday, but the EUR/USD is currently inside the window of time to post a potentially bearish closing price reversal top. This won’t change the main trend to down, but if confirmed, it could lead to a 2 to 3 day correction.

The main range is 1.1496 to 1.0636. Its retracement zone at 1.1167 to 1.1066 is controlling the longer-term direction of the Forex pair. It is also potential support.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1201, the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to yesterday’s close at 1.1232.

Bullish Scenario

A sustained move over 1.1232 will indicate the presence of buyers. This could trigger an acceleration to the upside. The daily chart also indicates there is no major resistance until 1.1496 to 1.1514.

Bearish Scenario

A sustained move under 1.1232 will signal the presence of sellers. This could trigger a break into the main Fibonacci level at 1.1167.

With the trend up, buyers could come in on a test of 1.1167. If this level fails as support then look for the break to possibly extend into the main 50% level at 1.1066.

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.