EUR/USD Forecast: Will Euro vs USD Resume Bearish Price Action ?
Euro vs US Dollar Technical Outlook
On Wednesday, EUR/USD rallied and neared the 1.0900 handle. However, the price declined and erased all of those gains. On Friday, the weekly candlestick closed with a Doji pattern reflecting the market’s indecision at this point.
Alongside that, the Relative Strength Index (RSI) remained flat below 50, highlighting a paused bearish momentum.
EUR/USD DAILY PRICE CHART (SEP 1, 2018 – May 18, 2020) Zoomed Out
EUR/USD DAILY PRICE CHART ( JAN 23 – May 18, 2020) Zoomed IN
Based on the daily chart analysis, on March 20 EUR/USD fell to a near three-year low at 1.0637. Later on, the market traded in a sideways move creating higher lows with lower highs then developed a symmetrical triangle pattern. Any violation of the lower line of the triangle would be a bearish signal.
On Wednesday, EURUSD declined to the current trading zone 1.0719 – 1.0822. Since then, the market has tested the high end of the zone yet failed to rally to the higher zone.
A close below the low end of the aforementioned trading zone could send EURUSD towards 1.0498. A further close below that level could embolden bears to press towards 1.0292. In that scenario, the weekly support area and levels marked on the chart (Zoomed in) should be monitored.
On the flip-side, a close above the high end of the zone may trigger a rally towards 1.0992. A further close above that level could extend this rally towards 1.1240. That being side, the daily and weekly resistance levels underscored on the chart should be kept in focus.
EUR/USD Four-Hour PRICE CHART (March 23 – May 18, 2020)
Looking at the four- hour chart, on April 16 EUR/USD broke below the uptrend line originated from the March 20 low mentioned in the daily chart analysis, then declined after. Today, the price eyes testing another uptrend line originated from the May 7 low at 1.0766. Therefore, any violation of this line would be considered as a bearish signal.
A break below 1.0763 would be considered another bearish signal and possibly send EURUSD towards the low end of the current trading zone discussed above on the daily chart. Although, the weekly support level underlined on the chart should be watched closely. In turn, any break in the other direction i.e. above 1.0896 may cause a rally towards 1.0992. Nonetheless, the weekly resistance level printed on the chart should be considered.
See the chart to find out more about the key levels EURUSD would encounter in a further bearish /bullish scenario.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.