Euro Technical Forecast – Talking Points
- EUR/USD maintains bullish posture as 1.2000 psychological level offers support
- EUR/AUD supported by moving average within a recently formed Rising Wedge
- EUR/JPY rangebound trading may continue but downside path appears more likely
- EUR/NZD’s Ascending Wedge pattern may lead to a reversal following downtrend
Discover what kind of forex trader you are
EUR/USD Technical Breakdown
Since breaking out of a Falling Wedge pattern earlier this month, EUR/USD has made significant progress, breaching above the psychologically imposing 1.200 level earlier this week. Now, the 1.2 handle appears to be providing a degree of support. The highly liquid currency pair is trending over 2.5% higher on the month following three consecutive monthly losses.
A move lower would likely see the 1.200 psychological level step back in as support once again. Even so, a break lower may sap bullish sentiment and extend prices lower. Should that occur, the 50-day Simple Moving Average (SMA) may underpin prices. To the upside, bulls most likely see the March high at 1.2113 as a key price target.
EUR/USD 8-Hour Chart
Chart created with TradingView
EUR/AUD Technical Breakdown
The Euro is on track to break a 5-month losing streak against the Australian Dollar, with EUR/AUD tracking a gain of just over 0.50% on the month. April began with a retest of trendline resistance, which was breached in late March. Since then, the currency pair has gone on to make modest gains, clearing the 20- and 50-day Simple Moving Averages.
A bullish cross between the two SMAs (20- and 50-day) last week has been followed up with a slight move higher. Now, EUR/AUD appears to have found support between the 20-day SMA and 38.2% Fibonacci retracement level from the March – April move. Price action looks to have formed a Rising Wedge pattern, which may ultimately end with a break lower, but for now, EUR/AUD may appreciate further.
EUR/AUD 8-Hour Chart
Chart created with TradingView
EUR/JPY Technical Breakdown
Rangebound is one word you could use to describe EUR/JPY price action so far in April. The upper and lower bounds that have contained the currency pair’s movement appear to be 130.66 and 129.54. The consolidation was preceded by a rather significant dip following a multi-month rally from the October swing low.
While more consolidation would maintain the status quo, a breakout or breakdown is likely once price pierces through the aforementioned levels. A concerning factor for a bullish thesis, however, is a weakening in the Relative Strength Index over the past several weeks, indicated by the green line on the RSI chart below. Moreover, MACD has broken below its center line earlier this week. Overall, the path lower may be the most likely scenario to consider.
EUR/JPY 8-Hour Chart
Chart created with TradingView
EUR/NZD Technical Breakdown
The Euro is tracking a loss of over 0.50% against the New Zealand Dollar so far this month. The bulk of EUR/NZD’s monthly loss occurred last week when the currency pair sold off following a pivot lower from resistance just under the 1.70 handle. The resistance area gave shape to an Ascending Triangle’s horizontal upper bound.
While most often a continuation pattern, the triangle’s formation follows a long-term downtrend and may lead to a reversal higher. With EUR/NZD currently testing the lower bound, however, price remains fragile and could breach below support, invalidating the pattern, and with it, the bullish bias. A bounce higher would inspire confidence for an ultimate breakout, but caution is likely the most prudent approach.
EUR/NZD 8-Hour Chart
Chart created with TradingView
Recommended by Thomas Westwater
Improve your trading with IG Client Sentiment Data
EUR/USD, EUR/AUD, EUR/NZD, EUR/JPY TRADING RESOURCES
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter
Be the first to comment