EUR / USD mid-session technical analysis as of December 31, 2021

The euro is up in mid-session on Friday as buyers took advantage of weak holiday volume. This move may have been fueled by the squaring of positions at the end of the year or perhaps the news that China is increasing its euro weightings in its key basket of the Yuan index.

At 4:44 p.m. GMT, EUR / USD is trading at 1.1374, up 0.0049 or + 0.44%. The Invesco CurrencyShares Euro Trust (FXE) ETF is at $ 105.70, up $ 0.48 or + 0.46%.

China will adjust the weights of a basket of key yuan indices in 2022, the country’s currency trading platform said on Friday, to an extent that traders and analysts say would help ensure that the value yuan does not act as a brake on Chinese exports.

From January 1, the Chinese Foreign Exchange Trading System (CFETS) will increase the weight of the US dollar in the CFETS basket of currencies to 19.88% from 18.79% and increase the weight of the euro to 18, 45% against 18.15%, according to an online statement.

Technical analysis of the daily swing chart

The main trend is down according to the daily swing chart, however, the momentum is up. A trade through 1.1383 will change the main trend upward. A break through 1.1186 will reaffirm the bearish trend.

The minor trend is upward. It’s controlling momentum. A trade through 1.1274 will change the minor downtrend.

The closest support is the pivot at 1.1326. Next support is the long term Fibonacci level at 1.1291.

On the upside, the first target is a pivot at 1.1397. A second pivot at 1.1439 is additional resistance.

Technical forecasts of the daily swing chart

The direction of EUR / USD towards Friday’s close will likely be determined by the reaction of traders at 1.1326.

A sustained move above 1.1326 will indicate the presence of buyers. Pulling out the intraday high at 1.1380 will indicate the buy is getting stronger. This could trigger a further move towards the main high at 1.1383.

Removing 1.1383 will change the main trend upward. This could create enough bullish momentum to fuel a move towards 1.1397, followed by 1.1439.


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