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EURUSD Price Outlook: Trend Higher Likely to Persist

EURUSD Price Outlook: Trend Higher Likely to Persist

Martin Essex, MSTA, Analyst

EURUSD price analysis:

  • The EURUSD price fell steadily between September last year and the end of May this year.
  • However, since then, it looks to have broken to the upside and June’s advance could well extend higher.

EURUSD price outlook positive

The EURUSD price has moved ahead strongly so far this month. It’s been a bumpy ride but, near-term, an extension to 1.14 now looks possible and if a climb above it is sustained there could be further gains. The change in mood can be seen clearly on the daily chart:

EURUSD Price Chart, Daily Timeframe (July 20, 2018 – June 27, 2019)

Latest EURUSD daily price chart.

Chart by IG (You can click on it for a larger image)

Moving in to the hourly chart, it’s noticeable that after peaking just above 1.14, at 1.1412, on June 25 the price has eased back.

EURUSD Price Chart, Hourly Timeframe (June 5-27, 2019)

Latest EURUSD hourly price chart.

Chart by IG (You can click on it for a larger image)

However, the 50-day moving average is close to rising above the 100-dma and, if it does so, the upward trend would be confirmed. Note too that the 14-day RSI has eased back in recent days from close to the 70 “overbought” level.

The key price levels to watch now are the 1.14 “round number” resistance level, the 1.1412 high touched on June 25 and 1.1425, where the upper boundary of the upward-sloping channel lies. Failure there could easily bring the price back down to the middle of the channel around 1.13. However, a breakthrough would bring the high just under 1.15, reached on March 20, into view as a possible upside target.

Bullish signal from IG client sentiment data

Meanwhile, IG retail trader data show 40.8% of traders are net-long, with the ratio of traders short to long at 1.45 to 1. In fact, retail traders have remained net-short since June 20, when EURUSD traded near 1.1292; the price has moved 0.7% higher since then. The number of traders net-long is 13.5% lower than last week, while the number of traders net-short is 40.4% higher.

At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short – and more net-short than a week ago – also suggests the EURUSD price may continue to rise.

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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