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Euro Weekly Technical Forecast: EUR/USD, EUR/JPY, EUR/GBP

Euro Weekly Technical Forecast: EUR/USD, EUR/JPY, EUR/GBP

2020-03-14 04:00:00
James Stanley, Strategist
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Euro, EUR/USD, EUR/JPY, EUR/GBP Technical Forecasts

  • The Euro was on the move this week around the ECB rate decision on Thursday.
  • Christine Lagarde warned of a 2008-like event around the slowdown emanating from the coronavirus.
  • The ECB did not cut rates as was widely-expected but did announce an increase in bond purchases to the end of this year.

EUR/USD Tanks as Risk Aversion Takes Hold

It was a brutal week across global markets as equities continued to sell-off as the world has become engulfed with fears of the coronavirus pandemic. While much remains unknown as to just how much damage might be done, one thing that is sure is that economic slowdowns will take place as one of the few ways to slow the spread of the virus is through social distancing. This means that businesses will take a hit, and for an economy like Europe that wasn’t exactly in great shape to begin with, the slowdown emanating from coronavirus fears could be devastating.

Christine Lagarde had warned of as much in a speech on Wednesday, warning that a 2008-like crisis could show should EU leaders not act swiftly to slow the spread of the virus. This was widely inferred that the ECB would step up the loosening at the rate decision that was set to be announced the following day; and while the bank did announce an increase in bond purchases out to the end of the year, they did not cut interest rates as was widely expected.

Next week will see the theme of fear continue and as the WHO said earlier today, Europe is the new epicenter of the pandemic. Below I look into three of the more popular Euro-pairs with an eye on technical context for next week.

EUR/USD Reverses from Resistance as USD-Strength Rages

Perhaps one of the bigger moves in the FX market was an aggressive rush of strength in the US Dollar as there was a flight-to-quality into cash; and the prior bullish trend in EUR/USD was hit hard after a visit up to a key zone of resistance. That resistance runs from 1.1448-1.1500; the former of those prices coming from the 50% marker of the 2017-2018 major move. That price had previously helped to hold the highs in March of 2019 so, technically, EUR/USD set a fresh yearly high on Monday of this week, albeit temporarily.

EUR/USD BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 20% -6% 6%
Weekly 62% 8% 32%
Current Retail Sentiment in EUR/USD
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The reversal from that resistance zone, however, was fast and aggressive; making for a difficult backdrop for bullish scenarios. Similarly, the pace of this recent sell-off and the close proximity to potential supports could complicate bearish scenarios and thus, the technical forecast will be set to neutral for the week ahead.

EUR/USD Technical Forecast: Neutral

EUR/USD Daily Price Chart

EUR/USD Daily Price Chart

EUR/USD on Tradingview

EUR/JPY Finishes the Week with a Strong Gain

Friday brought a strong bullish push in EUR/JPY as Yen-weakness showed with aggression. The prospect of additional stimulus out of the Bank of Japan helped to quell an early-week rally in the anti-risk Yen; and EUR/JPY reversed the entirety of the week’s losses, and then some on the back of this late-week move. After an almost 300-pip gain on Friday, EUR/JPY price action is nearing a key zone of resistance around the 120.00 handle, around which a bit of confluence exists.

EUR/JPY MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 20% 23% 21%
Weekly 117% 26% 63%
Current retail sentiment in EUR/JPY
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This may be an area where traders could potentially look for Euro-strength should the Japanese stimulus scenario come to fruition. From a technical perspective, however, there are still some bearish factors to contend with and, as such, the forecast will be set to neutral for the week ahead in EUR/JPY.

EUR/JPY Technical Forecast: Neutral

EUR/JPY Daily Price Chart

EUR/JPY Daily Price Chart

EUR/JPY on Tradingview

EUR/GBP Jumps to Five-Month-Highs

While there was a case for Euro-weakness this week, there was a stronger case for GBP-weakness as the Bank of England announced an emergency 50 basis point rate cut. This propelled the currency up to five-month-highs, where buyers all-of-the-sudden slowed the approach around the psychological level at .9000. Similar to EUR/JPY above, there are bullish hues to this backdrop; complicated by the fact that there’s enough bearish indications to offset that potential strength and, when taken with the fundamental backdrop, spells for a neutral forecast for the week ahead.

EUR/GBP BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 26% -18% 0%
Weekly 192% -17% 33%
Current retail sentiment in EUR/GBP
Get My Guide

EUR/GBP Technical Forecast: Neutral

EUR/GBP Daily Price Chart

EUR/GBP Daily Price Chart

EUR/GBP on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

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