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EUR/USD Price Remains Vulnerable to Further Sell-Offs

EUR/USD Price Remains Vulnerable to Further Sell-Offs

Nick Cawley, Strategist

EURUSD Price Charts and Analysis:

  • EUR/USD remains biased to the downside as downtrend continues to hold sway.
  • Any recovery may be short-lived.

Q3 2019 EUR and USD Forecasts and Top Trading Opportunities

EUR/USD Struggling to Find Support

The most actively traded FX-pair continues to drift and is looking for support to arrest its multi-month decline. The latest leg lower is being driven by dovish ECB talk and policy, while the US dollar is trimming back expectations of two interest rate cuts by the Federal Reserve in the months ahead. The ECB will be pleased that EURUSD is moving lower as it makes their exports more competitive at a time when growth in the EU is slowing sharply, especially in the zone’s ‘export engine’ Germany.

The daily chart confirms the ongoing weakness in the pair and suggests lower prices in the future. The series of lower highs have accelerated from the June 25 high, while the pair have leaked lower all the way back off the mid-February 2018 high at 1.2566. The pair are also trading below all three moving-averages, a negative bias, while big figure support at 1.1100, 1.100 and 1.0900 has failed to hold.

The daily chart does highlight that EURUSD is heavily over-sold although IG Client Sentiment shows that traders are currently 74.0% net-long the pair, giving us a bearish contrarian bias.

Initial resistance, albeit weak, is pegged at 1.0926, ahead of stronger resistance at 1.1027 and the 1.1100 to 1.1120 zone.

EURSUD Price Daily Chart (December 2018 – October 1, 2019)

EUR/USD Price Remains Vulnerable to Further Sell-Offs

Due to weakness in the pair, support levels are based off the weekly chart and highlight how much further the pair could collapse if buyers throw in the towel. There is a gap back in mid-April 2017 on the weekly chart between 1.0777 and 1.0821 that may attract sellers, before old higher lows at 1.0569 and 1.0455. A complete re-trace of the December 2016 – February 2018 rally would see 1.0340 as the final downside target. A print below here would see EURUSD at its lowest level since December 2002. The chart also shows the pair are currently oversold.

While short-term rallies may occur, the upside potential looks limited and the charts currently paint a gloomy picture for EURUSD going forward.

EURUSD Price Weekly Chart (January 2016 – October 1, 2019)

EUR/USD Price Remains Vulnerable to Further Sell-Offs

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EUR/USD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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

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