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EUR/USD Technical Analysis: Euro Coiling Up for a Breakout?

EUR/USD Technical Analysis: Euro Coiling Up for a Breakout?

Ilya Spivak,
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  • Euro might be coiling up for a breakout amid congestion below 1.15 figure
  • Lull in top event risk next week may give markets room to build conviction
  • Overall chart positioning seems to argue for a broadly bearish trend bias

The Euro may find be at a decisive juncture as the third quarter gets underway. The single currency faces a week largely devoid of big-splash event risk, leaving markets ample room to ponder next steps following a month of choppy consolidation, which may be setting the stage for a breakout.

Average daily rate-of-change studies show that volatility dropped back in June, receding to levels prevailing before the Covid-19 outbreak. Directional conviction has ebbed in tandem, with EUR/USD confined to a choppy congestion range anchored above resistance-turned-support at 1.1147. The first major upside hurdle lines up in the 1.1423-96 area, marked by recent swing highs.

Eur/usd chart

EUR/USD daily chart created with TradingView

While the bounds of May’s near-term uptrend have been broken, it is as yet unclear whether subsequent indecision marks digestion before another foray upward or the start of a reversal downward. Nevertheless, longer-term positioning on the monthly chart suggests the broader trend bias remains bearish, with a 12-year downtrend firmly intact and probably needing a push above 1.19 to be face invalidation.

EURUSD price chart

EUR/USD monthly chart created with TradingView

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--- Written by Ilya Spivak, Head APAC Strategist for DailyFX

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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