Yahoo News EUR/USD Mid-Session Technical Analysis for October 21, 2020
The Euro is extending its gains against the U.S. Dollar on Wednesday, hitting its highest level since September 21, after U.S. President Donald Trump boosted hopes for a large fiscal stimulus package, prompting some traders to ramp up bets on riskier currencies.
Trump raised hopes for a breakthrough in negotiations between lawmakers by saying he was willing to accept a large aid bill, despite opposition from his own Republican party.
At 13:38 GMT, the EUR/USD is trading 1.1864, up 0.0040 or +0.34%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up on Tuesday when buyers took out the last swing top at 1.1831. A trade through 1.1688 will change the main trend to down.
The short-term range is 1.2011 to 1.1612. The EUR/USD is currently trading on the strong side of its retracement zone at 1.1859 to 1.1811. This is helping to generate some of the upside momentum.
Daily Swing Chart Technical Forecast
The early price action suggests that the direction of the EUR/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the Fibonacci level at 1.1859.
Bullish Scenario
A sustained move over 1.1859 will indicate the presence of buyers. This could trigger a breakout over the next main top at 1.1872. This is a potential trigger point for an acceleration into the next main top at 1.1917.
Bearish Scenario
A sustained move under 1.1859 will signal the presence of sellers. This could trigger a pullback into the 50% level at 1.1811. This is a potential trigger point for a correction back into a minor pivot at 1.1779.
Side Notes
Although most of the rally this week has been fueled by speculators betting on a stimulus deal before the November 3 election, I think the official announcement of a stimulus package still has the potential to trigger a surge into at least 1.1917. After that, it becomes a buy the rumor, sell the fact situation, and prices could retreat.
Furthermore, after the expected rally is in the books, reality will set in and traders will once again start noticing the newly imposed restrictions due to a resurgence in COVID-19 cases. This could lead to a break in the EUR/USD.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
