EUR/USD Technical Analysis: Euro Rise Unlikely to Undo Downtrend
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro breaks 4-month resistance, opening the door for an upswing
- Dominant trend likely to remain bearish through corrective gains
- Monthly chart warns the Euro is on pace to revisit two-year lows
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The Euro has broken falling trend line resistance guiding it lower against the US Dollar since late June, suggesting a correction higher is afoot. From here, a daily close above the 38.2% Fibonacci retracement at 1.1083 opens the door for a test of the 50% level at 1.1146.
Breaking below counter-trend support set from the October 1 low looks to be a minimum pre-requisite to reengaging the downtrend. A daily close below that as well as resistance-turned-support at the just-broken trend line sets the stage to challenge the monthly low at 1.0879 once again.
All the same, the dominant trend bias continues to look decidedly bearish. A look at the weekly chart shows prices locked in a well-defined descent for the past 16 months. Invaliding that calls for a break north of that move’s upper boundary, now just a hair below the 1.13 figure.
Weekly EURUSD chart created in TradingView
The monthly chart looks still more ominous. It seems to show the Euro poised to prolong what has been a more than decade-long decline. Prices finished September with a break of the multi-year price inflection barrier at 1.0980. That seems to set the stage for a test of the 1.0459-1.0563 zone in the months ahead.
Monthly EURUSD chart created in TradingView
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.