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EUR/USD Weekly Technical Forecast: Fresh YTD Lows Keeps Lasting Bearish Trend Intact

EUR/USD Weekly Technical Forecast: Fresh YTD Lows Keeps Lasting Bearish Trend Intact

2018-05-07 10:00:00
Justin McQueen, Analyst
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EUR/USD TECHNICAL HIGHLIGHTS:

  • EURUSD bearish trend remains intact after posting fresh YTD lows.
  • US inflation data provides biggest risk for the Euro.

For the intermediate-term fundamental and technical outlook on EUR/USD, check out the recently released DailyFX Quarterly Forecast.

EURUSD made a firm breach below the psychological 1.2000 support area, subsequently setting the pair for a bearish trend to post fresh YTD lows of 1.1909. However, given the recent selling in EUR, investors will begin to ponder whether the bearish trend is set to continue.

Looking ahead to next week, the key risk event will be US CPI report, whereby the headline rate is expected to tick up to 2.5% from 2.4%, while the core reading Y/Y is seen ticking up 1ppt to 2.2%. This event will likely have the most impact on the Euro and potentially provide the impetus to push the currency lower.

A keen eye will be placed on the weekly close for EURUSD whereby a close below 1.1936 (61.8% Fibonacci Retracement of the 1.1553-1.2556 rise) could confirm that the bearish trend is set to last. In doing so, this could prompt further losses in EURUSD and make a run in for 1.1800, before testing 1.1790 which marks the 76.4% of the previously highlighted Fibonacci Retracement. As such, a material break lower may see traders eye the January 2017 trendline support situated at 1.1620.

However, given the recent selling in the pair, the Relative Strength Index resides in oversold territory, which could subsequently suggest that a reversal in the short-term is due, which in turn could see EURUSD potentially seeking a retest for the psychological 1.2000 level. A break above this may well see push the pair to near-term resistance of 1.2035/40, whereby short covering would likely take ahold above this level. Further topside levels are seen at the old support zone of 1.2145-55.

EURUSD PRICE CHART 1: DAILY TIMIE-FRAME (April 17-May-18)

EUR/USD Weekly Technical Forecast: Fresh YTD Lows Keeps Lasting Bearish Trend Intact

Chart by IG

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--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

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