EUR/USD Mid-Session Technical Analysis for November 1, 2021

The Euro is trading slightly higher on Monday following a steep sell-off the previous session. The price action likely reflects position-squaring ahead of the start of a two-day Federal Reserve policy meeting on November 2-3.

Euro Zone bond markets were calm early in the session following a surge in yields last week, though German bond yields still edged higher as investors held on to their bets for two rate hikes from the European Central Bank (ECB) next year, according to Reuters.

At 10:43 GMT, the EUR/USD is trading 1.1568, up 0.0005 or +0.04%.

At the ECB’s policy meeting last week, President Christine Lagarde disappointed expectations of a firm pushback against the recent pricing of two ECB rate hikes next year that are at odds with the bank’s inflation projections.

The anxiety sent bond yields surging on Thursday and Friday, as investors saw the ECB as lacking confidence in its own outlook and started to focus on implication for the bank’s bond purchases.

Markets were calmer on Monday, but some bond yields still rose and in a sign of caution, money markets held on to the rate-hike bets, still expecting a full 10-basis-point rate hike by July 2022 and two full hikes by October 2022.

In other news, monetary policy in the United States and elsewhere is in sharp focus this week, with the Federal Open Market Committee widely expected to announce a tapering of stimulus on Tuesday. The market has also priced in a 90% chance of quarter-point tightening by June 2022, factoring in another rate increase by December.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1524 will reaffirm the downtrend. The main trend will change to up on a trade through 1.1692.

The minor range is 1.1524 to 1.1692. Its 50% level at 1.1608 is resistance.

The short-term range is 1.1755 to 1.1524. Its 50% level at 1.1640 is another resistance level.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Monday is likely to be determined by trader reaction to 1.1563.

Bullish Scenario

A sustained move over 1.1563 will indicate the presence of buyers. However, with the main trend down, the EUR/USD is likely to run into resistance at 1.1608 or 1.1640.

Bearish Scenario

A sustained move under 1.1563 will signal the presence of sellers. Taking out last week’s low at 1.1535 will indicate the selling pressure is getting stronger with 1.1524 the next target. This price is also a potential trigger point for an acceleration to the downside with 1.1371 the next potential target.

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.