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.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
ECB Preview- EUR/USD Rally Faces Moment of Truth

ECB Preview- EUR/USD Rally Faces Moment of Truth

To receive Michael’s analysis directly via email, please SIGN UP HERE

Talking Points

EUR/USD Daily Timeframe

EUR/USD Daily Chart

Technical Outlook: Euro tested up-slope resistance yesterday after breaking above a multi-year trendline extending off the August 2015 high. Heading into the European Central Bank (ECB) interest rate decision tomorrow, the immediate focus range is 1.1439-1.1616. The immediate advance as at risk while within this range with the broader outlook weighted to the topside while above 1.1285.

Learn more about Pitchfork formations in Michael’s three-part trading series

EUR/USD 240min Timeframe

EUR/USD 240min Chart

Notes: A closer look at price action sees the pair reversing off up-slope resistance this week with the 2016 high converging on the 75% line just higher at 1.1616. Interim support rests at 1.1495 with the immediate focus higher while above 1.1439- A break below this region would risk a larger correction targeting 1.1366 & broader bullish invalidation at 1.1285-1.1312.

A breach of the highs keeps the broader long-bias in play targeting subsequent topside objectives at 1.1714 & the upper parallel (currently ~1.1770s). As always, these interest rate decisions invite a great deal of volatility and the focus will be on the accompanying commentary from President Mario Draghi.

From a trading standpoint, I would be looking to fade weakness on a spike lower tomorrow into the lower parallels – If euro is heading higher, price should hold above the weekly range lows. At the same time, failure at the upper parallel again would suggest near-term exhaustion in price- stay nimble into the release.

EUR/USD IG Sentiment
  • A summary of IG Client Sentiment shows traders are net-short EUR/USD- the ratio stands at -2.27–bullish reading
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. That said, Positioning is less net-short than yesterday but more net-short from last week and the combination of current sentiment and recent changes gives us a further mixed near-term trading bias.
  • Bottom line: Sentiment is coming off extremes and highlights the near-term risk to this advance in the Euro but ultimately, I’m looking to fade a pullback in the pair targeting a breach of the 2016 highs.

What to look for in EUR/USD retail positioning - Click here to learn more about sentiment!

---

Relevant Data Releases

EUR/USD Economic Docket

Join Michael on Friday for his bi-weekly Live Webinar on the Foundations of Technical Analysis- Register for Free Here!

Other Setups in Play:

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com.

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

DISCLOSURES