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EUR/USD Technical Analysis: Larger Recovery Hinted Ahead

EUR/USD Technical Analysis: Larger Recovery Hinted Ahead

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro gains most in nearly 3 months, breaks near-term down trend
  • Booking remaining short exposure but aiming to re-establish later

The Euro turned higher against the US Dollar as expected after finding support having hit a seven-month low below the 1.09 figure. Prices broke the series of lower highs and lows initiated in late September, implying near-term trend reversal. The longer-term bias continues to appear bearish however.

Near-term resistance is now at 1.1048, the 38.2% Fibonacci retracement. A break above that on a daily closing basis opens the door for a test of the 1.1109-23 area (50% level, August 31 low). Alternatively, a move back below the 23.6% Fib at 1.0973 sees the next downside barrier at 1.0926, the 14.6% retracement.

A short EUR/USD position was triggered at 1.1207 and partial profit taken after the trade satisfied its first objective. Remaining exposure will now be unwound amid signs of a larger correction ahead. Signs up bullish exhaustion will be sought to re-enter short in the days ahead.

Where is the Euro heading in the fourth quarter? See our forecast to find out!

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