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Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

Daniel Moss, Analyst

Euro, EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD – Talking Points:

  • EUR/USD could rebound higher after breaking key resistance.
  • Descending Triangle hints at further losses for EUR/GBP.
  • EUR/AUD guided lower by Descending Channel.
  • Schiff Pitchfork continuing to nurture EUR/NZD downtrend.
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The Euro has regained ground against the US Dollar in recent days, and may continue to do so over the coming weeks. However, the Euro-zone’s currency looks set to lose ground against the British Pound, Australian Dollar and New Zealand Dollar. Here are the key levels to watch for EUR/USD, EUR/GBP, EUR/AUD and EUR/NZD rates.

EUR/USD Daily Chart – Constructively Positioned Above Key Support

Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

EUR/USD daily chart created using Tradingview

As mentioned in previous reports, the technical outlook for EUR/USD rates remains skewed to the topside, as price tracks firmly above the sentiment-defining 200-dya moving average (1.1841) and pierces key psychological resistance at 1.1900.

The RSI failing to slide into oversold territory also hints at the possibility of further gains, given the four previous times that it fell below 40 since March, have coincided with swift rebounds higher.

Ultimately, a daily close back above the trend-defining 55-EMA (1.2040) is needed to validate bullish potential and open the door for buyers to drive the exchange rate back towards the February high (1.2243). Hurdling that brings the yearly high (1.2349) into the crosshairs.

Alternatively, if the 1.2000 handles successfully stifles buying pressure, a short term pullback towards the March 16 low (1.1882) could be on the cards.

Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

The IG Client Sentiment Report shows 43.61% of traders are net-long with the ratio of traders short to long at 1.29 to 1. The number of traders net-long is 2.65% lower than yesterday and 19.59% lower from last week, while the number of traders net-short is 5.63% higher than yesterday and 31.13% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias.

EUR/GBP Daily Chart – Descending Triangle Hints at Further Losses

Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

EUR/GBP daily chart created using Tradingview

The EUR/GBP exchange rate has toppled lower since the start of the year, falling as much as 4.7% from the 2021 open to its lowest levels in 12 months.

Bearish moving average stacking, in tandem with price consolidating below range support-turned-resistance at 0.8575 – 0.8595, suggests the path of least resistance is lower.

Indeed, the formation of a Descending Triangle implies that a downside move to 0.8350 could be in the offing, if sellers penetrate support at the monthly low (0.8540).

On the other hand, a daily close back above the 21-EMA (0.8618) would invalidate the bearish pattern and carve a path for EUR/GBP to climb back towards range resistance at 0.8670 – 8690.

Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

The IG Client Sentiment Report shows 65.73% of traders are net-long with the ratio of traders long to short at 1.92 to 1. The number of traders net-long is 6.91% lower than yesterday and 4.89% lower from last week, while the number of traders net-short is 6.10% higher than yesterday and 11.19% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBP prices may continue to fall.

Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/GBP trading bias.

EUR/AUD Daily Chart – Descending Channel Guiding Price Lower

Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

EUR/AUD daily chart created using Tradingview

EUR/AUD rates look poised to continue sliding lower, as prices track within the confines of a Descending Channel and firmly below all six moving averages.

A downside push to challenge the 61.8% Fibonacci (1.5269) seems likely in the near-term. If sellers gain a firm foothold below that on a daily close basis, a more extended move lower towards the 100% Fibonacci (1.5008) would probably eventuate.

On the other, an impulsive burst back above the 8-EMA (1.5384) could trigger a short-term rebound back towards the March 16 high (1.5472).

EUR/NZD Daily Chart – Schiff Pitchfork Nurturing Downtrend

Euro Price Action Set-Ups: EUR/USD, EUR/GBP, EUR/AUD, EUR/NZD

EUR/NZD daily chart created using Tradingview

In a similar fashion to its trans-Tasman counterpart, NZD looks set to extend recent gains against the Euro, as the EUR/NZD exchange rate tracks firmly within the confines of a descending Schiff Pitchfork.

Bearish moving average stacking, in combination with the RSI travelling below its neutral midpoint, suggests that further losses are likely in the near term.

A daily close below the pitchfork median line and 1.6500 mark probably intensifies selling pressure and results in a retest of the yearly low (1.6322).

Alternatively, if 1.6500 hold firm, a short-term recovery back towards the 34-EMA (1.6660) could be on the cards.

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

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