EUR/USD Mid-Session Technical Analysis for February 17, 2020

James Hyerczyk

The Euro is edging higher against the U.S. Dollar on Monday in limited trading. The U.S. is on a bank holiday so volume is well below average. The currency is also producing an inside range which suggests investor indecision and impending volatility.

Government bond yields in the Euro area inched up on Monday as efforts by Chinese authorities to cushion the blow from the coronavirus outbreak supported sentiment in world markets.

China on Monday lowered one of its key interest rates and at the weekend said it would roll out targeted and phased tax and fee cuts to support the world’s second biggest economy.

In early Monday trade, most 10-year bond yields were around 1-2 basis points higher on the day – a modest move that also suggested a strong dose of caution among bond investors.

At 12:54 GMT, the EUR/USD is trading 1.0838, up 0.0007 or +0.06%.

A meeting of Euro Zone finance ministers on Monday was also in focus for any signs that the bloc will loosen fiscal policy to shore up its economy.

Euro Zone governments are set to agree a more growth-friendly fiscal policy, three EU officials told Reuters earlier this month, a change from current targets that would pave the way for more spending in Germany amid fears of a downturn.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0827 will signal a resumption of the downtrend. The EUR/USD is in no position to change the trend to up, but it is down 11 sessions from its last main top at 1.1095, which puts it inside the window of time for a potentially bullish closing price reversal bottom.

The minor trend is also down. A trade through 1.0926 will change the minor trend to up. This will also shift momentum to the upside.

Short-Term Outlook

The downtrending Gann angle at 1.0875 could come into focus this week. It has been guiding the EUR/USD lower since January 31. It is moving down at a rate of 0.0020 per day.

Sellers are likely to come in on the first test of this angle. However, we could see an acceleration to the upside if buyers can overtake the angle.

As far as looking for a bottom, there is still too much uncertainty out there regarding the economic impact of the coronavirus to think about a meaningful rally. We could see some short-covering rallies designed to alleviate some of the downside pressure, however.

This article was originally posted on FX Empire