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

The Euro is trading flat against the U.S. Dollar while hovering just above its lowest level since July 23 reached the previous session. Helping to cap the common currency’s gains are expectations of the Federal Reserve to begin tapering its massive stimulus in November and raising U.S. interest rates sooner than previously expected in 2022. The hawkish moves are likely to commence well ahead of any tightening by the European Central Bank (ECB), making the U.S. Dollar a more attractive investment.

At 10:12 GMT, the EUR/USD is trading 1.1576, up 0.00%.

Benchmark 10-year Treasury yields are up for a sixth straight week and real 10-year yields, discounted for inflation, are rising far more quickly than counterparts in Europe.

“As long as markets remain confident that the U.S. is going to start tightening monetary policy within a reasonable timeframe, the dollar should remain well supported,” said Societe Generale strategist Kit Juckes.

“The prospect of the European Central Bank keeping rates below zero while the Fed hikes should keep euro/dollar in the post-2014 range, with a centre of gravity around $1.12-1.16,” he said.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1563 will signal a resumption of the downtrend. A move through 1.1755 will change the main trend to up.

The minor range is 1.1755 to 1.1563. Its 50% level or pivot at 1.1659 is potential resistance.

The short-term range is 1.1909 to 1.1563. Its resistance zone is 1.1736 to 1.1777.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Friday is likely to be determined by trader reaction to 1.1576.

Bullish Scenario

A sustained move over 1.1576 will indicate the presence of buyers. If this move is able to generate enough upside momentum, the rally could extend into the pivot at 1.1659.

Bearish Scenario

A sustained move under 1.1576 will signal the presence of sellers. This could lead to a retest of 1.1563. If this level fails then look out to the downside.

The daily chart indicates there is plenty of room to the downside before the next support at 1.1371. So don’t be surprised by an acceleration.

Closing Price Reversal Bottom Formation

Due to the prolonged move down in terms of price and time, the EUR/USD begins today’s session inside the window of time for a closing price reversal bottom.

Taking out 1.1563 then closing higher on Friday will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day counter-trend rally, but not necessarily a change in trend.

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.