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EUR/USD – Euro Rally May Just Be Getting Started vs US Dollar

EUR/USD – Euro Rally May Just Be Getting Started vs US Dollar

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EUR/USD Highlights:

  • EUR/USD rally may pause near-term, but has big potential
  • The big level of significance is December high of 11239

EUR/USD rally may pause near-term, but has big potential

The Euro has been surging lately on the back of a big uptick in FX volatility due to the coronavirus. Finally, we are seeing some major momentum out of the single-currency, which is an encouraging sign going forward for trading. The low last month came at a trend-line dating all the way back to 2000, and with a monthly reversal candle posted the rejection at support suggests a broader up-move is underway.

EUR/USD is still confined in a channel that is a part of the trend beginning in early 2018, but with the Euro screaming back higher, risk is heightened that the trend will continue to be thoroughly challenged and may lead to a much larger squeeze ahead.

With price around the top of the channel and 200-day there is risk of a minor pullback or pause. A cross above the top trend-line of the channel and, for confirmation, a breakout above the December 31 high at 11239 is seen as causing the market to reposition for higher prices.

Looking to a target, there is the 2008 trend-line (which put in the 2018 top), crossing down around 11700. While this is a good bit higher and will take some time to reach, short-term traders can still use the generally bullish backdrop to support near-term set-ups (i.e. constructive pullbacks/consolidation patterns). In the event this turns out to have been a short-lived squeeze higher and price never hurdles the aforementioned line/level, then we will have to reassess and go from there.

EUR Forecast
EUR Forecast
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EUR/USD Daily Chart (rally out of channel, above 11239 could be big)

EUR/USD daily chart

EUR/USD Chart by TradingView

EUR/USD Monthly Chart (reversal off 20-yr trend-line)

EUR/USD monthly chart

EUR/USD Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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