EURUSD Outlook Remains Bullish Heading into ECB
- EURUSD looks poised to make a move higher this coming week
- Upward tilting consolidation period and break above key levels puts focus on 2016 high or better
- ECB on Thursday could be a significant catalyst, ‘path of least resistance’ suggest bullish outcome
Looking for a longer-term view on EURUSD? Check out the Q3 Forecast.
Last week, the euro poked its head up above the August 2015 trend-line and horizontal resistance running back over two years, but was quickly swatted lower over the next couple of sessions. On Friday, however, with the help of poor U.S. economic data EURUSD was able to recoup those losses, closing the week back just above noted resistance. So far, this month we are seeing a series of higher lows and higher highs develop in an upward sloping consolidation phase. This sets the single-currency up for higher prices in the week ahead, continuing in line with our broader bullish bias of seeing the 2016 high (or better) soon. With the ECB coming up on Thursday there we have major catalyst which may underpin or undermine this bias. From a trend perspective, the ‘path of least resistance’ suggests we will see a bullish outcome for the euro on Thursday. In this event, eyes will be on how the market will react to the 2016 high at just over 11600. Beyond that high we will look to the August 2015 high at just over 11700 as the next price objective.
It will require a sharp break lower to undermine a constructive outlook. Should we see a strong failure to the downside and break of the April trend-line, along with trade below 11285, then we’ll need to reassess. In the unlikely event we see such a move, not only will brakes be put on an upward bias, but we would be forced to consider taking a bearish stance.
All-in-all, at this time there is little to suggest the euro doesn’t want to trade higher, and until there is we will run with a strong euro thesis. Join me live on Wednesday at 9 GMT and we’ll discuss price action just ahead of the ECB.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.