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EUR/USD Technical Analysis: Euro Rallies Most in 2 Months

EUR/USD Technical Analysis: Euro Rallies Most in 2 Months

Ilya Spivak,

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro breaks two-month resistance level, establishes foothold above 1.11
  • Looking to re-enter short in line with long-term trend once upswing fizzles

The Euro launched sharply higher against the US Dollar, putting in the largest daily advance in two months and securing a foothold above the 1.11 figure. The downward-sloping channel that capped upside momentum since early December now looks like a bullish continuation Flag pattern.

A daily close above the 50% Fibonacci retracement at 1.1115 clears the way for a challenge of the 61.8% level at 1.1257. Alternatively, a reversal below the 1.0927-74 area marked by the 38.2% Fib and Flag top resistance-turned-support opens the door for a test of the January 21 low at 1.0778.

We entered short EUR/USD at 1.0926. The trade has been stopped out on a daily close above 1.0974. From here, we will wait for the upswing to run its course and look for signs of bearish reversal to re-enter short in line with the long-term trend and our 2016 fundamental outlook.

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