Fundamental Fireworks, EUR/USD Technical Impasse

Fundamental Fireworks, EUR/USD Technical Impasse


Euro, EURUSD Talking Points:

  • It was a big weekend of drivers in Europe through European Parliamentary elections; but that interest is not significantly reflected on the charts as most Euro-pairs remain with some form of near-term digestion.
  • Last Tuesday, I called EURUSD a bear trap. On Thursday, the pair posed a false bearish breakout and prices have since snapped back to key resistance, taken from prior range support. Do EURUSD bears have another swing left?
  • DailyFX Forecasts are published on a variety of currencies such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading EURUSD? Check out our IG Client Sentiment Indicator.

EURUSD Snaps Back to Key Resistance Zone

It was a contentious weekend in European politics as populist parties continued to gain ground in key areas like Italy and France; with Emmanuel Macron’s En Marche party losing out to Marine Le Pen’s National Rally while Matteo Salvini’s League may have just become the most dominant party in Italy. To be sure, this is a theme that’s been brewing for years, drawing back to April of 2017 when Le Pen’s defeat led to a gap-up in EUR/USD that still has yet to be filled in the 1.0800-region.

This weekend’s elections saw far fewer fireworks transmitted through global markets as the Euro currency remains relatively quiet, all factors considered. While matters may be a bit constrained considering that the US was on holiday on Monday, there’s a relative dearth of bearish price action across risk markets like equities. In EUR/USD, price action remains with the very same themes that were present last week: Resistance is holding at a key zone on the chart, taken from prior range support. Last week’s high came-in around the 1.1212 level, which is the 61.8% Fibonacci retracement of the ‘lifetime move’ in EURUSD.

EURUSD Four-Hour Price Chart

euro price eurusd eur/usd chart

Chart prepared by James Stanley

EURUSD: Failed Bearish Breakouts

Last week was a rough outing for EURUSD bears. Prices in the pair maintained a bearish trajectory initially, dropping further on a rush of USD-strength as the US currency powered-up for a re-test of its two-year-high. That bullish breakout in USD fell flat, with bears returning after the release of a set of poor PMI’s out of the United States. In EUR/USD, this amounted to a short-lived bearish breakout that soon reversed, with price action pushing right back to that key area on the chart that’s been in-play, in one form or another, for the past six months.

EURUSD Four-Hour Price Chart: Support Turned Resistance

euro price, eurusd, eur/usd chart

Chart prepared by James Stanley

EURUSD Moving Forward: Waiting to Drop or Setting Up Bear Trap?

Last Tuesday, I called EURUSD a bear trap. Two days later, that false breakout showed up and price action quickly snapped back to the 1.1187-1.1212 level. After this week’s open and the US holiday on Monday, that resistance remains in-play. The big question at this point is whether Euro bears show-up to pose another push down to the 1.1100 handle and, perhaps even, break-through to the other side. Or, might the pair need a deeper bullish retracement in order to clear out stops on long-term shorts before that down-side potential becomes attractive?

On the resistance side of the coin, a few areas of interest remain, largely taken from that prior six-month-pattern of range-bound behavior. The 1.1248-1.1262 area remains of interest, as this zone helped to cap the early May highs in EURUSD with a strong resistance inflection around the FOMC rate decision earlier this month. A bit higher, around the 1.1325 level, is an area of resistance that helped to catch the April swing-highs; and above that, the 1.1448-1.1500 zone becomes attractive.

EURUSD Eight-Hour Price Chart

euro price, eurusd, eur/usd chart

Chart prepared by James Stanley

EURUSD Bearish Aspirations

Supporting the short-side of the pair has been the build of a bearish pattern in EURUSD. The horizontal support that’s priced-in around the 1.1109 handle is coupled with a bearish trend-line over the past couple of months, amounting to a descending triangle pattern. Such a formation will often be approached with a bearish aim, looking for the motivations that’s continued to drive bears into the pair to, eventually, play through for a break of the horizontal support. This does not, however, preclude a pullback in EURUSD this week; but the aim of that pullback would need to be controlled to keep the formation in-play. This would be looking for a hold of resistance inside of the 1.1225 area, which is around where that bearish trend-line projects coming into this week; and that’s a level that currently marks the two-week-high in the pair.

EURUSD Two-Hour Price Chart

euro price, eur/usd, eurusd chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





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