EURO : Technical Outlook
(Fri, 18 Dec 2020). The Euro looks poised to gain ground against the US Dollar, Japanese Yen and British Pound in the near term. Here are the key technical levels to watch for EUR/USD, EUR/JPY and EUR/GBP rates.
EUR/USD
EUR/USD rates seem poised to extend its recent push to yearly highs, after slicing through Bull Flag resistance and the psychologically imposing 1.2200 mark. With the RSI surging back into overbought territory, and the MACD climbing to its highest levels since late August, the path of least resistance continues to favour the upside.
A daily close above the 50% Fibonacci (1.2290) is needed to carve a path to challenge psychological resistance at 1.24, with the Bull Flag’s implied measured move suggesting prices could begin to probe the 61.8% Fibonacci (1.2453) in the near term. Alternatively, failure to gains a firm foothold above 1.2300 could inspire a short-term pullback towards former resistance-turned-support at the December 4 high (1.2178).
EUR/JPY
EUR/JPY rates appear to be eyeing a push to fresh yearly highs, as price continues to consolidate in a Bull Flag continuation pattern just shy of key resistance at the 1.2700 mark. With price tracking firmly above all four moving averages, and the RSI U-turning at 60, hints that an extended topside push could be in the offing.
Gaining a firm foothold above the monthly high (126.74) on a daily closes basis is likely required to validate the bullish pattern and bring the 2019 high (127.50) into focus. The pattern’s implied measured move suggesting EUR/JPY could climb a further 2% from current level to test psychological resistance at 129.00.
Conversely, a pullback towards the 50% Fibonacci (125.52) could eventuate if flag resistance (126.74) holds firm, with a break below the 21-day moving average (125.47) probably paving the way for prices to challenge the October high (125.08).
EUR/GBP
EUR/GBP rates are continuing to coil up within the confines of a Symmetrical Triangle, after failing to gain a firm foothold above resistance at the June high (0.9176). Although prices have slipped lower in recent days the longer-term outlook continues to favour the upside, as the exchange rate remains constructively positioned above the sentiment-defining 200-DMA (0.8960).
With the RSI and MACD indicator both hovering above their respective neutral midpoints, the path of least resistance seems higher.
Pushing back above the December 16 high (0.9056) would probably generate a topside push to retest confluent resistance at the 61.8% Fibonacci (0.9129) and triangle downtrend. Clearing that likely opens the door for prices to probe the September high (0.9291).
On the other hand, slipping below the 100-DMA (0.9011) could trigger a more extensive pullback and bring psychological support at 0.8900 into the crosshairs.
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