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EUR/USD Mid-Session Technical Analysis for May 26, 2020

The Euro advanced on Tuesday, boosted by a weaker U.S. Dollar as growing optimism about a global recovery from the COVID-19 pandemic supported riskier currencies.

“At the moment the Euro is torn between political risks on the one hand and positive sentiment on the markets as a result of further easing of the corona-related restrictions on the other. This morning, the latter is dominating, allowing it to appreciate against the dollar,” said Thu Lan Nguyen, a currency analyst at Commerzbank.

“However, in view of the continued disagreements within the European Union about a corona recovery fund, the single currency is likely to run out of steam quite quickly in Euro-Dollar,” she said.

At 13:30 GMT, the EUR/USD is trading 1.0971, up 0.0076 or +0.69%.

In economic news, the mood among German exporters recovered somewhat in May after a “catastrophic” April, the first full month of coronavirus lockdown measures in Europe’s largest economy, the Ifo Institute said on Tuesday.

“Virtually every sector still expects further declines yet these will be less sharp than had been expected in the previous month,” the Munich think tank said in a monthly release.

The Ifo export indicator based on a survey of around 2,300 manufacturing businesses, rose in May to -26.9 from -50.2. It is a net reading for respondents expecting an increase minus those who see a decline.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on May 21.

A trade through 1.1008 will negate the closing price reversal top and signal a resumption of the uptrend. Taking out the 1.1018 main top could launch an acceleration to the upside. The main trend will change to down on a trade through the last main bottom at 1.0766.

The minor trend is up. A trade through 1.1008 reaffirms the minor trend. A trade through 1.0871 will change the minor trend to down. This will also confirm the shift in momentum to the downside.

The intermediate range is 1.0636 to 1.1147. Its retracement zone at 1.0892 to 1.0831 is support.

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

The main range is 1.1496 to 1.0636. Its retracement zone at 1.1066 to 1.1167 is the primary upside target. This zone is also controlling the longer-term direction of the EUR/USD.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.0971, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the Fibonacci level at 1.0987.

Bullish Scenario

A sustained move over 1.0987 will indicate the buying is getting stronger. This could lead to a test of the two main tops at 1.1008 and 1.1018. Taking out 1.1018 could trigger a surge into 1.1066

Bearish Scenario

The inability to overcome 1.0987 will signal the return of sellers or indicate the buying is getting weaker. This could trigger a pullback into 1.0937. If this level fails then look for the selling to possibly extend into 1.0892 to 1.0871.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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