Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
EURUSD Backing-and-Filling, ’Bull-flag’ Coming into View

EURUSD Backing-and-Filling, ’Bull-flag’ Coming into View

What’s inside:

  • EURUSD chopping lower in constructive fashion, building a ‘bull-flag’
  • Probe of confluent support could mark the end of the correction
  • On a bull-flag breakout, the US Dollar Index (DXY) to probe deeper into long-term support

Check out our new Trading Guides page for both market forecasts and educational content.

Last week, trading in EURUSD was dominated by choppy back-n-forth price action. On three different days the euro traded below the prior week’s low of 11689, and each time it rejected lower prices and closed the session with a bounce. Overall, since topping out around the 2010 low near 11900 the euro has been constructively working off overbought conditions. This is viewed as a positive for the intermediate-term outlook, but still holds a bearish tilt in the very short-term. While the current configuration could be considered a valid ‘bull-flag’, some more chop within the confines of the descending channel (‘bull-flag’) will do some good in terms of building a stronger, more mature pattern. A drop to the April trend-line and lower parallel near the 2016 high of 11616 would make for a good final test of confluent support within the bullish sequence. In the event we see a breakout above the upper parallel, focus will quickly shift towards 11910 and a higher high towards the 2012 low at 12041, and possibly higher.


Turning focus to the US Dollar Index (of which the euro holds a ~57% weighting), the DXY is trading in a major long-term zone of support. It’s towards the upper end of this zone, so a probe even deeper into support would be the outcome on another surge in the euro. The dollar has few backers these days, with bearishness clearly escalating to a point where the scale may soon tip in favor of a reversal. The one-sided trade into major long-term support could soon present a material, tradeable low in the not-too-distant future. This of course means the euro will get turned upside down and set in motion a decline unlike anything we’ve seen in recent months.

US Dollar Index (DXY): Monthly

The bottom line for this coming week – EURUSD looks poised to continue choppy-trade with a slightly bearish bias within the confines of the channel, perhaps only providing the nimble short-term trader with opportunities to fade minor price swings. However, in the event we see a firm break above the upper parallel of the maturing bull-flag, the end of the correction will likely be over and another (possibly final) surge higher for the single-currency could be in store. To undermine this outlook, it would require a breakdown below the before-noted support surrounding 11600. At that juncture, a broader rebound in the US dollar will likely be in the works.

Live events are held daily by DailyFX analysts, for a full line-up see the Webinar Calendar.

---Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.

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