EUR/USD Breaks Downtrend, Can it Rally?

EUR/USD Worth Outlook:

• The EUR/USD basic panorama stands comparatively unchanged regardless of latest losses
• Technicals trace the pair could push greater within the days forward after a latest downtrend was damaged
• IG shopper sentiment reveals retail merchants are net-short EUR/USD, which can recommend the pair will climb greater

US Greenback Worth Outlook: EUR/USD Breaks Downtrend, Can it Rally?

The US Greenback loved a bout of power to start the yr as EUR/USD endured a pullback towards assist. Whereas the temporary reversal in value was laborious to disclaim, it may be argued there have been few adjustments within the underlying basic panorama to drive such a transfer. To make sure, a decline in threat urge for food and broken sentiment doubtless performed a job as traders piled into the protection of the Dollar, however with sentiment repaired USD might face renewed stress.

Prime eight Foreign exchange Buying and selling Methods and their Professionals and Cons

Additional nonetheless, the technical EUR/USD panorama seems encouraging. Whereas latest weak point could have spooked some bulls, it is likely to be considered as mere consolidation earlier than a continuation greater by others. To that finish, the collection of higher-highs and higher-lows courting again to March stays intact and EUR/USD trades above a plethora of longer-term transferring averages.

EUR/USD Worth Chart: Weekly Time Body (February 2018 – February 2021)

A lot of the identical may be seen on the every day chart. Buying and selling narrowly beneath the 50-day transferring common, gold’s latest breakout of the descending channel could enable it to take intention at overhead resistance. An imminent MACD crossover beneath the Zero line with value above the 200 exponential transferring common lends additional bullish proof.

EUR/USD Worth Chart: 4 – Hour Time Body (January 2020 – February 2021)

Preliminary areas of curiosity would possibly reside on the January 2021 excessive close to 1.2349 adopted by resistance barely greater round 1.2400. Northward nonetheless resides a collection of horizontal trendlines that will look to maintain value contained so trimming publicity at – or earlier than – these ranges is likely to be prudent.

Conversely, the realm barely beneath 1.2000 would possibly function an invalidation zone that if value had been to breach earlier than pushing greater, might undermine the shorter-term commerce setup altogether. One other threat is sustained consolidation across the 50-day easy transferring common.

That stated, EUR/USD seems tilted to the topside and IG shopper sentiment information reveals retail merchants stay net-short the foreign money pair. Since we usually take a contrarian view to crowd sentiment, retail positioning would possibly recommend EUR/USD will climb greater within the days forward. Observe @PeterHanksFX on Twitter for updates on this pair.

–Written by Peter Hanks, Strategist for DailyFX.com

Contact and observe Peter on Twitter @PeterHanksFX