Technical Outlook:
The Euro continues to tread on a very important long-term trend-line that rises up from as far back at 1985 when reconstructing it with the current constituents’ currencies pre-Euro. It is a big line indeed, and so far it being held, but not exactly in a way that invokes confidence from the long-side. The repeated failed attempts to rally are getting smaller and suggest that a breakdown could happen very soon. The price action is coiling up and on that a break below 10768 will likely have EUR/USD rolling towards the March low at 10637, which if broken could spell serious trouble as the single currency tries to leave behind the multi-decade support line.
EUR/USD Monthly Chart (major long-term trend-line)
EUR/USD Daily Chart (weakening price action)
The US Dollar Index (DXY) is largely driven by the Euro as it accounts for ~57% of the index. On that, if the Euro does indeed break the major long-term trend-line then we would see a significant lift in the index. The current price action suggests a base is forming, and with the general trend higher over the years it appears likely it will in some fashion continue higher. There is support right around 98.20 via a late-March low and the 200-day MA in confluence. The first level of resistance clocks in at 100.93. Perhaps price bobbles around a bit before moving, but if one side or the other breaks momentum could pick up.
US Dollar Index (DXY) Daily Chart (may be building base for run)
US Dollar Index (DXY) Chart by TradingView
For all the charts we looked at, check out the video above…
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
