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Euro Technical Analysis - EUR/USD, EUR/CHF. Euro Snaps Lower on Volatility Breakout

Euro Technical Analysis - EUR/USD, EUR/CHF. Euro Snaps Lower on Volatility Breakout

Daniel McCarthy, Strategist

Euro, EUR/USD, EUR/CHF - Talking points

  • EUR/USD is making new lows and momentum continues to evolve
  • EUR/CHF is at fresh 7-year lows as volatility is expanding rapidly
  • Bearish momentum is in place, what could signal a reversal for the Euro?

EUR/USD TECHNICAL OUTLOOK

EUR/USD tanked lower at the start of the week, breaking below all previous support levels and making a 2-year low.

The previous support levels of 1.10898 and 1.11065 might now offer pivot point resistance on a bounce.

Above those levels, the prior highs of 1.12743 and 1.13959 may also offer resistance.

A bearish triple moving average (TMA) formation requires the price to be below the short term SMA, the latter to be below the medium term SMA and the medium term SMA to be below the long term SMA. All SMAs also need to have a negative gradient.

The criteria for a TMA in EUR/USD was met on the 24th February. In the sessions ahead this week, the 10-day SMA might be worth watching for clues on whether or not bearish momentum starts to fade.

EURUSD CHART

Chart Created in TradingView

Zooming out and looking at the weekly chart for EUR/USD, we can see an ascending trend line nearby that may provide support. It is currently dissecting at 1.0819.

The previous low of 1.06363 in March 2020 could also provide support.

EUR/USD Weekly Chart

EURUSD CHART

Chart Created in TradingView

EUR/CHF TECHNICAL ANALYSIS

EUR/CHF has seen a huge move in volatility as the price collapsed to a 7-year low this week.

This is illustrated by the width of the 21-day simple moving average (SMA) basedBollinger Band that has expanded dramatically.

While the bearish trend and momentum is in place for now, a close back inside the Bollinger Band may provide a clue for a potential pullback.

Nearby resistance might be at the recent peaks of 1.00800 and 1.02380.

EURCHF CHART

Chart Created in TradingView

Once again zooming out on the weekly chart, we can get a historical perspective of the significance of the move in EUR/CHF. The last time it broke down through these levels, the Swiss National Bank abandoned their policy of keeping the Swissie weak.

A previous low at 0.97893 might be the next support level to be tested. Resistance could be at the break point of 1.02350.

EUR/CHF Weekly Chart

EURCHF CHART

Chart Created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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

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