EUR/USD – Euro Back Testing Major Long-term Support
- EUR/USD tagging trend-line from 2000
- If it doesn’t get into gear soon the break could be significant
EUR/USD tagging trend-line from 2000
Back in February EUR/USD traded down to a trend-line dating back to 2000. It goes back to the early 1980s if you construct the Euro from its constituents. The bounce in Feb was strong, but then it was followed by an even more impressive down-move that had the trend-line slightly undercut. But given how long-term the threshold is, you really have to give it some wiggle room before considering a breach confirmed.
At any rate, the late-March rally and subsequent fade we are seeing now, further suggests that the long-term trend-line is losing its power as support. Repeated tests of a technical threshold within such close proximity often lead to one of the tests eventually failing. That could be coming soon.
With the big swing-low from last month at 10636 as a guide, a breakdown through that point should start to get the Euro some separation from the 20-year trend-line. The January 2017 low at 10340 would then likely come into play quickly, and it seems quite reasonable at that juncture to look for parity to follow.
However, before running with an aggressively bearish bias we should continue to respect support until broken. It’s still possible that we see a bottom and rally develop. That will take some time to put itself together, as the trend structure in the near-term is unfavorable, but nevertheless a consideration we need to have on the table.
EUR/USD Daily Chart (losing power at support)
EUR/USD Monthly Chart (20-yr trend-line)
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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.