EUR/USD Mid-Session Technical Analysis for May 22, 2020

The Euro is trading lower against the U.S. Dollar on Friday as worries about rising diplomatic tensions between the United States and China supported safe-haven demand for the greenback. Traders are also reacting to the release of the European Central Bank minutes that hinted at more policy easing in June.

At 12:46 GMT, the EUR/USD is trading 1.0903, down 0.0047 or -0.43%.

U.S. –China trade relations have sourced over a broad range of issues, including China’s treatment of Hong Kong and its response to the coronavirus pandemic, which is driving investors into the safe-haven U.S. Dollar.

In other news, the European Central Bank is “fully prepared” to provide even more stimulus as soon as June to support an economy that may shrink by a tenth this year due to the COVID-19 pandemic, the accounts of the bank’s April meeting showed on Friday.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum has shifted to the downside with the formation of a closing price reversal top on Thursday and its subsequent confirmation earlier today.

A trade through 1.1008 will negate the closing price reversal top, while a move through 1.1018 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.0766.

The intermediate range is 1.0636 to 1.1147. Its retracement zone at 1.0892 to 1.0831 is possible support. This zone is currently being tested.

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

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.0903, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the 50% level at 1.0892.

Bearish Scenario

A sustained move under 1.0892 will indicate the presence of sellers. If this move creates enough downside momentum, we could see a correction into the Fibonacci level at 1.0831.

Bullish Scenario

A sustained move over 1.0892 will signal the presence of buyers. If this move generates enough upside momentum then look for a retest of the 50% level at 1.0937.

Taking out the intraday high at 1.0954 will indicate the buying is getting stronger. This could trigger a surge into 1.0987, followed by 1.1008.

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.