EUR/USD Mid-Session Technical Analysis for May 21, 2020

The Euro is trading higher on Thursday for a fifth session after erasing earlier losses fueled by optimism of a closer fiscal union in Europe. Rising tensions between the United States and China as well as weak Euro Zone economic news put pressure on the single-currency earlier in the session.

Short-covering ahead of key U.S. economic reports could also be providing support. These include Weekly Jobless Claims at 12:30 GMT and Flash Manufacturing PMI at 13:45 GMT.

At 12:21 GMT, the EUR/USD is trading 1.0999, up 0.0020 or +0.18%.

France and Germany proposed a 500-billion-Euro ($543 billion) recovery fund on Monday to offer grants to regions and sectors hit hardest by the coronavirus pandemic, raising hopes that European policymakers were taking more decisive steps to tackle the economic damage.

On Thursday, the Euro fell into negative territory as fresh data again showed the devastating impact of the coronavirus on the Euro Zone economy, though the situation eased as some governments partially lifted lockdowns.

IHS Markit’s Flash Composite Purchasing Manager’s Index, seen as a good gauge of economic health, recovered to 30.5 from April’s 13.6.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1018 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.0766.

The minor trend is also up. A trade through 1.0775 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is 1.1147 to 1.0727. Its retracement zone at 1.0987 to 1.0937 is support.

The main range is 1.1496 to 1.0636. Its retracement zone at 1.1066 to 1.1167 is the next major upside target zone.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.0999, the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to the short-term Fibonacci level at 1.0987.

Bullish Scenario

A sustained move over 1.0987 will indicate the presence of buyers. The next upside target is the main top at 1.1018. Taking out this level will likely lead to a test of the major 50% level at 1.1066.

Bearish Scenario

A sustained move under 1.0987 will signal the presence of sellers. This could trigger a break into the 50% level at 1.0937. A failure to hold this level will indicate the selling pressure is getting stronger. This could lead to a test of the next 50% level at 1.0892.

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.