The Euro is trading lower late Friday after erasing nearly half of its weekly gains in a matter of hours. This followed a rally to its highest level since May 2018. The price action suggests end of the month profit-taking and position-squaring is behind the move because no major news events were announced.
If you’re looking to blame something, blame Washington’s inability to come to an agreement over coronavirus relief. On Friday, Republicans and Democrats made little progress toward a coronavirus relief deal as economic data show an economy still reeling from the coronavirus pandemic.
According to CNBC, Democrats have rejected the possibility of passing a short-term extension while the sides negotiate a broader deal. Meanwhile Republicans started to float a short-term fix this week after they released their aid proposal on Monday, more than two months after Democrats passed their rescue bill in the House.
At 18:34 GMT, the EUR/USD is trading 1.1796, down 0.0052 or -0.44%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous day’s high.
The main trend will change to down on a move through 1.1185. This is highly unlikely by the market is in a position to form a daily closing price reversal top that could trigger the start of a 2 to 3 day correction if confirmed on Monday.
The minor range is 1.1371 to 1.1909. Its 50% level at 1.1640 is a potential downside target. Since the main trend is up, buyers are likely to come in on a test of this level.
The main range is 1.1185 to 1.1909. Its retracement zone at 1.1547 to 1.1462 represents value. A test of this zone is likely to attract even stronger buyers.
Due to the prolonged move up in terms of price and time, the possibility of a closing price reversal top isn’t a surprise.
The key level to watch into the close is Thursday’s close at 1.1848. A close under this level will form the daily closing price reversal top. If confirmed on Monday then look for the start of a 2 to 3 day correction with the minor 50% level at 1.1640 the minimum downside target.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
More From FXEMPIRE:
- S&P 500 Price Forecast – Stock Markets Continue Channeling Higher
- Natural Gas Weekly Price Forecast – NG Markets Form Neutral Candle for the Week
- Silver Price Forecast – Silver Markets Continue to Grind
- EUR/USD Mid-Session Technical Analysis for July 31, 2020
- Gold Price Prediction – Prices Rise Closing the Week on an Up Note
- Oil Remains Under Pressure As Virus-Related Restrictions Pose Risk For Oil Demand