Euro Weekly Technical Outlook: EUR/USD Channel Structure in Focus
EUR/USD Technical Outlook – NEUTRAL
- EUR/USD channeling higher but momentum is weak
- Continued strength could have big roadblock in play
- A correction will put the trend to a test
EUR/USD trend higher but tepid
The Euro continues to rally against the Dollar, but over the past month it has lost considerable momentum. This doesn’t mean the EUR/USD rally is on its way to ending, but if it continues to act sluggish it might not take much to snap the upward channel structure.
As it currently sits at the bottom of the channel, which acts as support, we will want to see if it can hold and turn back higher as it has on each little dip in recent weeks. If it can, then look for it to rally to a new cycle high above 12349.
The potential here, still, is that we see the 2018 highs in the mid 124/125s reached. If the EUR/USD can reach that point we will see what it is really made of, as it will be a substantial area to climb through.
On the flip-side, should support break then we could see a decline ensue that takes price back to a trend-line running higher since May. The line may intersect as confluence with the September 1 high at 12011. This would be another point in time, as we would get a chance to see what the trend is made of as a correction is either met or not met by buyers.
All-in-all, sticking with the multi-week channel as a guide for now. If price stays above the lower parallel then the trend remains neutral to upward, fall below and things could turn negative for the single currency.
EUR/USD Daily Chart (channeling towards 2018 highs)
EUR/USD 4-hr Chart (channel structure in play near-term)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.