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Euro Price Outlook: EUR/USD 'V-Shaped' Recovery Nears Completion

Euro Price Outlook: EUR/USD 'V-Shaped' Recovery Nears Completion

2020-03-05 12:17:00
Nick Cawley, Analyst
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EUR/USD Price, News and Analysis:

  • EUR/USD rallies 4% since February 20 low.
  • ECB expected to loosen monetary policy further next week.

EUR/USD Eyes a Fresh 2020 High

The euro has been in demand against a range of currencies in the last three weeks and is closing in on the December 31 high at 1.1239 to complete a ‘V-shaped’ recovery. The low print filled the ‘Macron gap’ between 1.0777 and 1.0821 made on the weekly chart in mid-April 2017 and since then has pushed higher with old resistance zones and all three moving averages providing little in the way of resistance. The move has been helped by a weakening of the US dollar, with Tuesday’s 50 basis point rate cut by the Fed, and expectations of further cuts at the March 17-18 FOMC meeting, providing an additional catalyst.

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The Euro may soon come under downside pressure with growing expectations that the ECB will further loosen monetary policy at next Thursday’s central bank meeting. While the ECB may cut interest rates by a further 10 basis points, to take the lending rate further negative to -0.60%, this may do little to help boost aggregate demand in the single-block. It is likely that the ECB will increase lending to SMEs to help prompt economic activity and boost growth, putting downside pressure on the Euro.

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EUR/USD’s recovery now nears an important area with Tuesday’s 1.1213 spike high standing in the way of 1.1239. The sequence of lower highs that start all the way back from February 2018 have already been broken by the December 31 print and a close above that level would add credibility to a further move higher in the medium-term. The CCI indicator shows that the pair are overbought at the moment which may slow down any further upside momentum.

EUR/USDWeekly Price Chart (August 2019 – March 4, 2020)

eur/usd price chart
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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 EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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