EURO WEEKLY TECHNICAL FORECAST – TALKING POINTS
- Euro forex crosses trade around key areas of confluence ahead of the ECB meeting next week which could spark EUR price action and dictate the currency’s next direction
- EURUSD and EURGBP could be pushed lower by strong downtrends that may prevail if technical resistance levels dominate recent Euro upside
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According to the EXY Euro Index, the EUR has drifted roughly 1 percent lower so far this year. Technical weakness expressed by the prominent downtrend could accelerate if spot prices fail to base and break above resistance soon. The Euro’s direction over next week will likely be dictated by the upcoming ECB meeting, however, where the central bank is expected to release its latest monetary policy announcement during Wednesday’s session at 11:45 GMT. That being said, which technical levels should be eyed for EURUSD and EURGBP currency crosses?
EURUSD PRICE CHART: 4-HOUR TIME FRAME (MARCH 04, 2019 TO APRIL 05, 2019)
EURUSD has struggled to reclaim the 1.1250 price level which has served as strong resistance near the 76.4 percent Fibonacci retracement line. After several failed attempts to reclaim dominance over this area of confluence, the spot EURUSD downtrend could resume and push prices lower to retest the low recorded March 7.
Moreover, with downtrends shown in the RSI and EMAs in addition to the MACD appearing to roll, these technical indicators could suggest further EURUSD weakness. On the contrary, a relatively less-dovish ECB has potential to spark the Euro to move higher and send EURUSD towards the 61.8 percent Fib at the 1.1280 level. This outcome could also become more likely if the latest FOMC minutes reveal a relatively more-dovish Fed.
EURGBP PRICE CHART: 4-HOUR TIME FRAME (MARCH 04, 2019 TO APRIL 05, 2019)
EURGBP price action has been primarily driven by the latest Brexit developments. Spot prices have fluctuated in a choppy range between the 0.8472 and 0.8724 handles since late February. The forex pair currently trades around the 38.2 percent Fibonacci level and 50.0 percent retracement line drawn from the low on March 13 and high on March 21.
That being said, spot EURGBP appears to have coiled judging by the string of lower highs and higher lows. Increasingly dovish remarks from ECB President Mario Draghi has potential to send the Euro lower where EURGBP could pivot down towards the 0.8550 area with the 61.8 percent and 76.4 percent Fibonacci retracement levels serving as possible levels of consolidation. On the contrary, a position from the ECB that walks back dovish expectations for the central bank’s third round of TLTROs could bolster the Euro and bid EURGBP up towards the 23.6 Fibonacci retracement line.
For this currency pair, it is imperative to note that the current legal default is for the UK to depart the EU with no-deal on Friday, April 12 resulting in a ‘hard’ Brexit where the British Pound likely would experience a bearish reaction. In this case, spot EURGBP has potential to skyrocket higher towards the 0.9100 level where the currency traded at the beginning of the year. With UK Prime Minister Theresa May requesting another Brexit delay to extend Article 50 for the second time, the direction of EURGBP largely depends on the EU’s willingness to accept the PM’s plea.
ADDITIONAL TECHNICAL FORECASTS
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- Written by Rich Dvorak, Junior Analyst for DailyFX
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