The EUR/USD is trading sharply higher at the mid-session. The catalysts behind the move are talk of possible delays to tax reform plans and lower Treasury yields. Lower equity prices may also be responsible for some flight to safety buying.
Traders are also reacting to a jump in the German Trade Balance which came in better than the forecast at 21.8 Billion. Additionally, Euro Zone economic growth is likely to continue unabated in the second half of the year, the European Central Bank said in a regular economic bulletin.
“Overall, the latest economic indicators are, on balance, consistent with a continued robust growth pattern in the second half of 2017,” the ECB said in a bulletin.
The ECB went on to say, “Private consumption is underpinned by rising employment, which is also benefiting from past labor market reforms, and by increasing household wealth.”
Furthermore, the ECB said, “The upswing in business investment continues to benefit from very favourable financing conditions and improvements in corporate profitability.”
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 1.1690 will change the main trend to up. A move through 1.1553 will signal a resumption of the downtrend.
The EUR/USD is also trading between a pair of major 50% levels at 1.1702 to 1.1520. This area is acting like a support zone. Additionally, the Forex pair has crossed to the strong side of a major Fibonacci level at 1.1610, indicating that the buying may be getting stronger.
Based on the early price action, look for an upside bias as long as the EUR/USD can hold above 1.1610.
Holding above 1.1610 may create the upside momentum needed to drive the market into a pair of downtrending Gann angles at 1.1650 to 1.1652. Since the trend is down, sellers may come in on a test of the resistance cluster. However, taking out 1.1652 could trigger an acceleration to the upside with short-term potential targets coming in at 1.1690 and 1.1702.
The inability to overcome 1.1652 will signal the presence of sellers. A move under 1.1610 will indicate the selling is getting stronger with the next likely downside targets 1.1553, 1.1539 and 1.1520.