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Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP

James Stanley, Senior Strategist

Euro Talking Points:

  • The single currency put in big moves against USD and JPY on the heels of yesterday’s FOMC rate decision.
  • In EUR/USD, it appears that we have a trend reversal whereas EUR/JPY bulls may still be able to make a case for continuation. EUR/GBP, however, presents an interesting situation for those looking to fade this recent run of Euro weakness.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
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The single currency has been on the move over the past 24 hours, helped along by a surging US Dollar on the heels of yesterday’s FOMC rate decision. Against both the US Dollar and the Japanese Yen, the Euro has folded over in a very noticeable manner, highlighting potential trend changes in each market. Against the British Pound, however, the Euro ran into an area of support that may be able to support reversal or pullback themes for those that are looking to fade the move.

EUR/USD as the Big Mover

The US Dollar surge was probably the most noticeable item still driving from that rate decision yesterday. EUR/USD was previously showing a stubborn element of strength, holding above the 1.2000 level for the better part of the past two months.

But, as I had warned on Tuesday, the pair was setting up in a bearish fashion, showing a lower-low to go along with a possible lower-high. That sequence continued and as the Fed spoke yesterday, the bottom fell out of the pair.

EUR/USD Two Hour Price Chart

EURUSD Two Hour Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

Resistance Potential – Prior Support – Fibonacci Support Below

This move is even showing visibly on longer-term charts, which highlights the possibility of this being something more than just a short-term move. With the Fed now opening the door to ‘less loose’ policy, the focus for stimulus may shift to Europe as the European economy still continues to struggle with pandemic-driven challenges.

From the Daily chart below, we can see how 2021 has essentially been a range in EUR/USD so far. Support showed around the 1.1700 handle. But the area that was crossed around 1.2000 was a major spot that didn’t even seem to slow down the sell-off. If bears get bashful and if prices begin to retrace, this could be an operative area to look for that next item of lower-high resistance.

EUR/USD Daily Price Chart

EURUSD Daily Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

EUR/JPY Trend Pulls Back

EUR/JPY has arguably been even more bullish than EUR/USD so far this year. While EUR/USD presented an element of range with a recent bullish bias, buyers have been in-control of EUR/JPY price action for much of the year, with prices taking that topside ride on an upward-sloping trendline.

The past two days, however, has seen a quick reversion in that theme as buyers have bailed and sellers have started to move in. Prices are now fast approaching this bullish trendline and for those with an aggressive stance towards Euro strength, looking to fade this recent bout of weakness, a support inflection could be an item to work with.

EUR/JPY Daily Price Chart

EURJPY Daily Price Chart

Chart prepared by James Stanley; EURJPY on Tradingview

EUR/GBP with Reversal Potential

For those that are looking to fade this move of Euro weakness but would prefer to do so in a traditionally less pensive pair than EUR/JPY or EUR/USD, EUR/GBP may present some interest.

The Euro similarly sold off yesterday against the British Pound but the move appears more moderate. And longer-term structure remains a bit more intact than the two markets looked at above. At this point, a big of support is showing in the zone between the 76.4 and 78.6% Fibonacci retracements and this zone has been helping to set support for the past month.

This can keep the door open to reversal themes in the pair.

EUR/GBP Daily Price Chart

EURGBP Daily Price Chart

Chart prepared by James Stanley; EURGBP on Tradingview

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

Contact and follow James on Twitter: @JStanleyFX

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

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