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EUR/USD Technical Analysis: Digesting Move to 6-Month High

EUR/USD Technical Analysis: Digesting Move to 6-Month High

Ilya Spivak,

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro digesting gains after rising to six-month high versus US Dollar
  • Waiting for actionable signal to enter short in line with long-term trend

The Euro paused to digest gains after breaking above February’s swing high to reach the highest level in nearly six months against the US Dollar. The single currency gained against a backdrop of broad-based USD weakness courtesy of comments from Fed Chair Yellen, which the markets interpreted as dovish.

Near-term resistance lines up in the 11478-95 area, marked by the 76.4% Fibonacci expansion and the October 15 high. A break above this juncture on a daily closing basis exposes the 1.1681-1714 zone (100% level, August 24 high). Alternatively, a reversal below the 61.8% Fib at 1.1353 opens the door for a test of the 50% expansion at 1.1252.

We are keen to enter short EUR/USD in line with our 2016 fundamental forecast. With that in mind, we see recent gains as corrective rather than indicative of a true buying opportunity. Still, an actionable sell signal is absent for now and we will stand aside until something more tangible presents itself.

What do DailyFX analysts expect from the Euro in 2Q? Find out here !

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