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Euro, EURUSD, EURJPY Talking Points:

- The Euro is seeing a bit of strength on the open of this week’s trade, as both EURUSD and EURJPY are bouncing from key areas of chart support. In EURUSD, the five-month range remains, and as looked at in this week’s FX Setups, prices put in a test of this support last week with buyers showing up at Fibonacci levels around 1.1187 and then 1.1212. In EURJPY, prices cauterized support around the prior resistance area of 125.00.

- This week’s economic calendar offers only a handful of high-impact data prints, but the events that are set for this week offer considerable interest on a couple of very important themes. Wednesday looks to be particularly important, as an ECB rate decision takes place at 8:45 AM ET and note that the rate decision is on a Wednesday as opposed to the typical ECB Thursday. Later on Wednesday, FOMC meeting minutes from the March rate decision will be released, and this is from when the Fed cut forecasts for rate hikes in 2019.

- DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

EURUSD Holds Key Support Ahead of ECB

Is this the week that EURUSD breaks below range support? Judging by retail traders’ positioning, many are betting against that premise as traders long outpace shorts by a margin of more than two-to-one. And given the contrarian nature of retail trader positioning, this can make the prospect of a downside break a bit more interesting as this week’s economic calendar brings the European Central Bank’s April rate decision on Wednesday of this week.

Do you want to see how retail traders are currently trading EURUSD? Check out our IG Client Sentiment Indicator.

That EURUSD range support came under fire last week: Prices pushed down for a test of the Fibonacci level at 1.1187 on Tuesday; and after that held, a bit of higher-low support showed at the Fibonacci level around 1.1212, which is the 61.8% retracement of the ‘lifetime move’ in EURUSD. This kept the door open for range-approaches in the pair, and as looked at in FX Setups for This Week, a downside break through support, particularly ahead of or around ECB, can re-open the door to short-side strategies in the pair.

EURUSD Daily Price Chart

eurusd eur/usd daily price chart

Chart prepared by James Stanley

At this point, prices found a bit of short-term resistance around the psychological level at 1.1250, which is the same price that’s held the highs so far in the month of April. If prices can pose a bullish break of that resistance, next resistance can be sought out around 1.1320, after which the 1.1400 level becomes of interest. Above this, range resistance lurks from 1.1448 up to the 1.1500 psychological level.

EURUSD Four-Hour Price Chart

eurusd eur/usd four hour price chart

Chart prepared by James Stanley

EURJPY Builds April Range After Late-Q1 Sell-Off

Themes of risk aversion began to show after that most recent FOMC rate decision, and this is something we’ll get a bit of clarity on this week with the release of meeting minutes from that event. After the FOMC went dovish by cutting rate hike forecasts for 2019, the risk trade unexpectedly took a dip. This may have been related to yield curve inversion sparking fresh fears around slowdown potential, but this was coupled with a gasp of Yen-strength as investors embarked on a flight-to-quality after what was a generally optimistic and upbeat Q1.

But, as the risk trade has come back alive in the opening days of Q2, Yen-weakness has returned, and EURJPY has mounted above a key area on the chart around 125.00. This was range support in 2018, seeing tests in May and then again in August. Bears were finally able to push below this level around the 2018-close and 2019-open; but the Q1 recovery in the pair saw prices climb-back above until that late-quarter sell-off.

EURJPY Daily Price Chart

eurjpy eur/jpy daily price chart

Chart prepared by James Stanley

The big question around the pair for this week is whether risk-on market behaviors push up to fresh 2019 highs. Given the backdrop for a potential continuation of Yen-weakness, particularly in that risk-on scenario, this may make EURJPY as a more attractive option for traders looking at strategies of strength in the single currency. And conversely, for traders looking at ‘risk-off’ options, a down-side break back-below 125.00, which could show around the Wednesday ECB rate decision, could put the pair back in the cross-hairs for that theme.

EURJPY Four-Hour Price Chart

eurjpy eur/jpy four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX