EUR/USD Technical Outlook: Could Retreat
US Dollar, Euro, EUR/USD - Technical Outlook:
- EUR/USD could retreat slightly.
- There’s not much evidence to suggest the recent rally is anything more than corrective.
- What are the key levels to watch?
EUR/USD TECHNICAL FORECAST – SLIGHTLY BEARISH
EUR/USD, up 8% since September, has gained strength since earlier this month – shifting to ‘higher gears’ within a rising pitchfork channel from October. A break above an internal trendline within a rising pitchfork channel often signifies that an uptrend is gaining momentum. Repeated breaks above all the internal trendlines and the upper edge of a rising channel indicate that an uptrend is solidifying.
EUR/USD 240-minutes Chart
However, in recent days, EUR/USD has struggled to break past key converged resistance: the 200-day moving average, the August high of 1.0370, near the January 2017 low of 1.0340. As the previous update highlighted, the last time the pair was above the long-term average was in mid-2021, so the resistance could be tough to clear, at least in this attempt.
EUR/USD Daily Chart
Immediate support is at last week’s low of 1.0270. Any break below could open the door towards 1.0120, near strong support at the late-October high of 1.0090. EUR/USD needs to stay above 1.0090 for the short-term upward pressure to remain intact. Moreover, the big picture remains bearish for EUR/USD after the break this year below a slightly upward sloping trendline from 2015. The price objective following the breakout of the seven-year sideway range works out to around 0.8900.
Having said that, a break above the 200-day moving average would be a sign that the medium-term weak outlook is changing. A decisive break above could pave the way toward 1.0615 (the 38.2% retracement of the 2021-2022 slide).
--- Written by Manish Jaradi, Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.