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EUR/USD Mid-Session Technical Analysis for May 25, 2020

The Euro is trading slightly lower against the U.S. Dollar, but the volume behind the selling pressure is a little tough to gauge due to the thin-U.S.-Memorial Day volume.

Traders did say that the U.S. Dollar is garnering some support as worries about a standoff between the United States and China over civil liberties in Hong Kong fueled demand for safe-haven currencies.

The dollar likely firmed after a senior White House official said Beijing’s plan to impose a security law on the former British colony of Hong Kong could lead to U.S. sanctions, which could worsen an already tense relationship between the world’s two-largest economies.

At 13:21 GMT, the EUR/USD is trading 1.0898, down 0.0004 or -0.04%.

Daily EUR/USD
Daily EUR/USD

Euro Zone Bond Yields Steady

Euro Zone bond yields were steady on Monday, as the market overlooked a paper from Austria, Sweden, Denmark and the Netherlands opposing the EU’s planned grants-based recovery funds and awaited the European Commission’s own release later this week.

“We propose to create an Emergency Recovery Fund based on a ‘loans for loans’ approach,” the four countries said in a so-called non-paper outlining their position.

In other news, the Ifo Institute’s closely watched business climate index rebounded more than expected in May, recovering from its most dramatic fall on record the previous month, as a gradual lifting of lockdowns boosted corporate expectations. The Ifo reported a reading of 79.5 versus an estimate of 78.3.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside on May 21. A trade through 1.1008 and 1.1018 will signal a resumption of the uptrend. The main trend will change to down on a move through the last swing bottom at 1.0766.

The EUR/USD has been rangebound for nearly two-months. This is being controlled by a pair of retracement zones.

The intermediate range is 1.0636 to 1.1147. Its retracement zone at 1.0892 to 1.0831 has been acting like support.

The short-term range is 1.1147 to 1.0727. Its retracement zone at 1.0937 to 1.0987 has been acting like resistance.

The main range is 1.1496 to 1.0636. Its retracement zone at 1.1066 to 1.1167 is the primary upside target. It appears to be controlling the longer-term direction of the EUR/USD.

Short-Term Outlook

The direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the 50% level at 1.0892.

If sellers take control and this level fails then look for a move into 1.0831. This is the last potential support before a string of bottoms at 1.0775, 1.0766 and 1.0727.

If buyers regain control then look for a labored rally with targets coming in at 1.0937, 1.0987 and 1.1008.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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