EUR/USD Weekly Forecast: 2020 Opening Range Points to Further Losses
Euro Talking Points
EUR/USD struggles to hold its ground during the first full week of January, and the opening range for 2020 raises the scope for a further decline in the exchange rate in light of the failed attempt to test the August high (1.1250).
Technical Forecast for Euro: Bearish
The monthly opening range has been a key dynamic for EUR/USD in the fourth quarter of 2019 as the exchange rate carved a major low on October 1, with monthly high for November occurring during the first full week of the month, while the low for December materialized on the first day of the month.
With that said, the 2020 opening range for EUR/USD raises the scope for a further decline in the exchange rate as the correction from the 2019 low (1.0879) fails to produce a run at the August high (1.1250).
At the same time, recent developments in the Relative Strength Index (RSI) suggest the bullish momentum will continue to abate as the oscillator snaps the upward trend from December after failing to push into overbought territory.
In turn, EUR/USD has slipped back below the 200-Day SMA (1.1139) after trading above the indicator for the first time since June, and negative slope in the moving average casts a bearish outlook for the exchange rate as it continues to track the downward trend carried over from 2018.
As a result, the technical outlook foreshadows a more bearish fate for EUR/USD, and the bullish momentum from the end of 2019 may continue abate as the Relative Strength Index (RSI) reverses course after failing to push above 70.
EUR/USD Daily Chart
Source: Trading View
The opening range for 2020 casts a bearish outlook for EUR/USD as the exchange rate pulls back from the December high (1.1239), and the correction from the 2019 low (1.0879) may continue to unravel amid the failed attempt to test the August high (1.1250).
The Relative Strength Index (RSI) highlight a similar dynamic as the oscillator snaps the bullish formation carried over from the previous month after failing to push into overbought territory.
Need a break/close below the 1.1100 (78.6% expansion) handle to open up the 1.1040 (61.8% expansion), with the next area of interest coming in around 1.0950 (100% expansion) to 1.0980 (78.6% retracement).
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.