EUR/USD Mid-Session Technical Analysis for March 27, 2020

The Euro is trading lower against the U.S. Dollar on Friday, but it was still on track for an almost 3% gain this week. Still, it was not the stronger Euro that fueled the gains, but rather the weaker U.S. Dollar.

The sharp reversal to the upside by the Euro was fueled by a drop in demand for the U.S. Dollar. The move was in response to the deluge of measures from the U.S. Federal Reserve to address dollar liquidity problems.

The dollar funding squeeze in the interbank market was abated considerably this week. Currency basis swap spreads, the premium investors need to pay over the interbank rates to fund dollars through foreign currency swaps, fell considerably. This made the dollar a less-desirable investment while driving up the Euro.

At 12:41 GMT, the EUR/USD is trading 1.0980, down 0.0054 or -0.49%.

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of the closing price reversal bottom at 1.0636 on March 23.

A trade through 1.0636 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through 1.1496.

The minor trend is also down. A trade through 1.1237 will change the minor trend to up. This will reaffirm the momentum.

The short-term range is 1.1496 to 1.0636. Its retracement zone at 1.1066 to 1.1167 is the first upside target and potential resistance area. Earlier today, a rally to 1.1087 stalled after the EUR/USD reached the retracement zone.

The new minor range is 1.0636 to 1.1087. Its retracement zone at 1.0861 to 1.0808 is the next downside target.

Daily EUR/USD

Daily Technical Forecast

Based on the early price action and the current price at 1.0980, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the steep uptrending Gann angle at 1.0956.

Bullish Scenario

Holding 1.0956 will indicate the presence of aggressive counter-trend buyers. If this creates enough upside momentum then look for the rally to possibly extend into 1.1066 to 1.1087.

Bearish Scenario

A sustained move under 1.0956 will signal the presence of sellers. Crossing to the weak side of the downtrending Gann angle at 1.0936 will indicate the selling is getting stronger. This could trigger a plunge into at least 1.0861 to 1.0808.

This article was originally posted on FX Empire

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