Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
US Dollar Price Outlook: EUR/USD Breaks Downtrend, Can it Rally?

US Dollar Price Outlook: EUR/USD Breaks Downtrend, Can it Rally?

Peter Hanks, Strategist

EUR/USD Price Outlook:

  • The EUR/USD fundamental landscape stands relatively unchanged despite recent losses
  • Technicals hint the pair may push higher in the days ahead after a recent downtrend was broken
  • IG client sentiment reveals retail traders are net-short EUR/USD, which may suggest the pair will climb higher
Top Trading Opportunities in 3Q
Top Trading Opportunities in 3Q
Recommended by Peter Hanks
Get Your Free Top Trading Opportunities Forecast
Get My Guide

US Dollar Price Outlook: EUR/USD Breaks Downtrend, Can it Rally?

The US Dollar enjoyed a bout of strength to begin the year as EUR/USD endured a pullback toward support. While the brief reversal in price was hard to deny, it can be argued there were few changes in the underlying fundamental landscape to drive such a move. To be sure, a decline in risk appetite and damaged sentiment likely played a role as investors piled into the safety of the Greenback, but with sentiment repaired USD could face renewed pressure.

Top 8 Forex Trading Strategies and their Pros and Cons

Further still, the technical EUR/USD landscape looks encouraging. While recent weakness may have spooked some bulls, it might be viewed as mere consolidation before a continuation higher by others. To that end, the series of higher-highs and higher-lows dating back to March remains intact and EUR/USD trades above a plethora of longer-term moving averages.

EUR/USD Price Chart: Weekly Time Frame (February 2018 – February 2021)

eurusd weekly price chart outlook

Much of the same can be seen on the daily chart. Trading narrowly beneath the 50-day moving average, gold’s recent breakout of the descending channel may allow it to take aim at overhead resistance. An imminent MACD crossover beneath the 0 line with price above the 200 exponential moving average lends further bullish evidence.

EUR/USD Price Chart: 4 – Hour Time Frame (January 2020 – February 2021)

eurusd daily price chart forecast

Initial areas of interest might reside at the January 2021 high near 1.2349 followed by resistance slightly higher around 1.2400. Northward still resides a series of horizontal trendlines that may look to keep price contained so trimming exposure at – or before - these levels might be prudent.

Conversely, the area slightly beneath 1.2000 might serve as an invalidation zone that if price were to breach before pushing higher, could undermine the shorter-term trade setup altogether. Another risk is continued consolidation around the 50-day simple moving average.

EUR/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -15% 25% -6%
Weekly -20% 17% -11%
What does it mean for price action?
Get My Guide

That said, EUR/USD appears tilted to the topside and IG client sentiment data reveals retail traders remain net-short the currency pair. Since we typically take a contrarian view to crowd sentiment, retail positioning might suggest EUR/USD will climb higher in the days ahead. Follow @PeterHanksFX on Twitter for updates on this pair.

--Written by Peter Hanks, Strategist for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

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

DISCLOSURES