Euro Technical Forecast
- EUR/USD technical signals hint weakness in the medium-term
- EUR/NZD could be topping, overturning the dominant uptrend
- EUR/JPY is facing key support with bullish reversal warnings
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EUR/USD Technical Outlook
The Euro pulled off a recovery against the US Dollar towards the latter-half of last week, but more needs to be done to find meaningful upside momentum. Taking a look at the EUR/USD daily chart below, the pair appears to have formed a Descending Triangle over the course of a month, and that is typically a continuation pattern.
Positive RSI divergence occurred in the lead-up to gains in EUR/USD this past week, hinting that momentum to the downside was fading. As such, we may be due for a retest of triangle resistance. If it holds and the Euro turns lower, there may be a good chance that the pair will retest triangle support at the lower bound between 1.1110 and 1.1132.
In the medium-term, the descending triangle may eventually pave the path to breaking out and targeting lows achieved back in April 2017. This would place support as a range between 1.0821 and 1.0852. Otherwise, if EUR/USD does push higher in the week ahead, near-term resistance appears to be at 1.1262. You may follow me on Twitter here @ddubrovskyFX for timely fundamental and technical Euro updates.
EUR/USD Daily Chart
Meanwhile, the Euro could be on the verge of extending gains against the New Zealand Dollar. This is because this past week EUR/NZD formed a Shooting Star candle at the peak on May 22, which is a sign of indecision. Here, negative RSI divergence is showing fading upside momentum and there has since been a couple of closes to the downside.
With that in mind, the pair could be looking at a retest of the rising trend line from late March in the week ahead. This has been guiding the pair about 5% higher since bottoming at 1.6296. Near-term support can be placed at 1.7020 which if taken out, opens the door to testing 1.6974 afterwards. If you are interested, I have also outlined a technical outlook for EUR/GBP.
EUR/NZD Daily Chart
EUR/JPY Technical Outlook
Against the Japanese Yen, the Euro is also facing fading downside momentum, as indicated by positive RSI divergence below. This comes at a time when EUR/JPY is within an important range of support between 122.41 and 122.99. These are the lows achieved back in May and June 2017, with recent wicks extending to 122.08. This may offer a bullish trajectory for EUR/JPY towards resistance around 123.67.
Fundamentally, something to note for downside Euro risks are the ongoing European Parliamentary Elections which may sink the currency early into the new week. If EUR/JPY brushes aside these bearish reversal warnings, that would expose the “flash crash” lows achieved back in early January. Otherwise, clearing resistance opens the door to testing the falling resistance line from early March.
EUR/JPY Daily Chart
* Charts created in TradingView
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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter