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

The Euro is trading lower against the U.S. Dollar on Wednesday in a light trade. This week’s lower drift suggests a cautious tone as investors refrain from taking on risky positions a day ahead of a key speech by Federal Reserve Chairman Jerome Powell.

At 14:03 GMT, the EUR/USD is trading 1.1816, down 0.0004 or -0.03%.

Amid growing speculation Powell could unveil a softer policy stance towards inflation at the annual Jackson Hole retreat on Thursday, investors are bracing for the Fed’s possible new steps to prop up the U.S. economy.

In other news, new orders for key U.S.-made capital goods slowed in July, suggesting the rebound in business investment could become more gradual amid uncertainty about the course of the COVID-19 pandemic, even as the recovery in manufacturing appears to be gaining traction.

Core Durable Goods increased 1.9% last month, the Commerce Department said on Wednesday. Economists polled by Reuters had forecast such orders climbing 1.9% in July.

Overall durable goods surged 11.2% in July, compared with expectations of an increase of 4.3% and 7.6% increase a month earlier.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1711 will change the main trend to down. A move through 1.1966 will signal a resumption of the uptrend.

The minor trend is up. A trade through 1.1754 will shift momentum to the downside.

The nearest resistance is a pair of 50% levels at 1.1831 and 1.1860.

If the main trend changes to down then look for the selling to possibly extend into the retracement zone at 1.1668 to 1.1598.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD is likely to be determined by trader reaction to the 50% level at 1.1831, but don’t expect an acceleration to the upside unless buyers can take out 1.1860 with conviction.

Bearish Scenario

A sustained move under 1.1831 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into 1.1754.

Bullish Scenario

A sustained move over 1.1831 will signal the presence of buyers. Overtaking 1.1860 will indicate the buying is getting stronger. This could lead to a test of the minor top at 1.1883.