EUR/USD Mid-Session Technical Analysis for March 16, 2020

The Euro is trading higher against the U.S. Dollar on Monday after the Federal Reserve made an emergency 50 basis-point rate cut late Sunday. The move weakened Treasury yields, making the U.S. Dollar a less-desirable investment.

Gains were capped, however, by reports that Euro Zone finance ministers will discuss on Monday the possible use of an EU emergency fund worth more than 400 billion Euros ($447.6 billion) to tackle the economic crisis caused by the coronavirus outbreak, officials said.

At 08:52 GMT, the EUR/USD is trading 1.1170, up 0.0066 or +0.59%.

The talks will be held amid calls from EU lawmakers to allow an exceptional use of the European Stability Mechanism (ESM) to tackle the unprecedented health and economic crisis.

The financial firepower of the ESM, the most powerful EU rescue fund, could provide the largest fiscal boost so far pledged at EU level. But such a move is still seen by many as potentially premature and hard to agree upon.

Markus Ferber, the coordinator on financial affairs of the center-right grouping, the biggest in the EU Parliament, struck a cautious tone.

“The ESM is a crisis management tool and if we open up the ESM funds this could also send a signal of imminent doom to the markets,” he said.


Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 1.1496 will signal a resumption of the uptrend. A move through 1.0778 will change the main trend to down.

The minor trend is down. This is controlling the downside momentum.

The main range is 1.0778 to 1.1496. Its retracement zone at 1.1137 to 1.1052 is support. This zone is controlling the near-term direction of the EUR/USD.

The minor range is 1.1496 to 1.1056. Its retracement zone at 1.1276 to 1.1328 is the primary upside target. Trader reaction to this zone will tell us if the selling is strong enough to form a secondary lower top, or if the buying is strong enough to make 1.1056 a new secondary higher bottom.

Daily Technical Forecast

Based on the early price action and the current price at 1.1170, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the 50% level at 1.1137.

Bullish Scenario

A sustained move over 1.1137 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into the minor 50% level at 1.1276, followed by the downtrending Gann angle at 1.1296.

Bearish Scenario

A sustained move under 1.1137 will signal the presence of sellers. The trade could get choppy because of Gann angles at 1.1118 and 1.1096.

Taking out the main Fibonacci level at 1.1052 will indicate the selling is getting stronger. This could trigger a break into the uptrending Gann angle at 1.0948.

Side Notes

Essentially, we’re looking for an upside bias on a sustained move over 1.1137, and a downside bias on a sustained move under 1.1052.

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.