EURO : Technical Analysis

(Thu, 28 Jan 2021). The Euro is testing a multitude of pivotal support levels against its major counterparts, which could see it extend its recent losses. However, if these inflections points hold, there is a distinct possibility that EUR could regain lost ground in the coming days. Here are the key levels to watch for EUR/USD, EUR/JPY and EUR/GBP rates.

EUR/USD DAILY CHART – 6-WEEK SUPPORT RANGE COMING UNDER PRESSURE

EUR/USD rates could be at risk of further losses in the short term, as price slides below the trend-defining 50-day moving average (1.2119) to challenge the key support range at 1.2055 – 1.2075. With the slopes of all three exponential moving averages – 8-, 21- and 34-period – notably turning lower, and the RSI dipping below 50, the path of least resistance seems lower. A daily close below 1.2050 would probably trigger a more extended pullback towards the 100-DMA (1.1945) and former resistance-turned-support at the November 9 high (1.1920). Clearing that could pave the way for sellers to drive the exchange rate back towards the sentiment-defining 200-MA and August low (1.1696).

However, if range support remains intact, a rebound higher could be on the cards. A daily close above the downtrend extending from the yearly high and 8-EMA (1.2131) would likely neutralize near-term selling pressure and open the door for buyers to probe the January high (1.2349). Hurdling that probably signals the resumption of the primary uptrend and brings the 61.8% Fibonacci (1.2453) into focus.

EUR/JPY DAILY CHART – UPTREND FROM MARCH 2020 NADIR CAPPING DOWNSIDE

EUR/JPY rates, on the other hand, appear poised to continue gaining ground in the near term, as price holds constructively above the trend-defining 50-MA (125.80) and the uptrend extending from the March 2020 low remains intact. With the exchange rate tracking above all 6 moving averages, and the MACD gearing up to cross back above its ‘slower’ signal line counterpart, further gains seem likely. Gaining a firm foothold above the January 25 high (126.37), on a daily close basis, would probably pave the way for a retest of the yearly high (127.49). Breaching that likely brings the 38.2% Fibonacci (128.52) into the crosshairs. Conversely, piercing through 125.50 could intensify selling pressure in the short term and result in a pullback to range support at 124.95 – 125.05.

EUR/GBP DAILY CHART – SYMMETRICAL TRIANGLE BREAK HINTS AT FURTHER LOSSES

After collapsing through Symmetrical Triangle support and the April 2020 high (0.8864), EUR/GBP’s longer-term technical outlook seems skewed to the downside. However, the formation of a bullish Hammer candle just above psychological support at 0.8000, combined with the RSI continuing to respect the uptrend extending from the December 2019 extremes, suggests that the exchange rate could gain ground in the coming days.

Pushing back above the 8-EMA (0.8868) could generate a push to retest range resistance at 0.8913 – 0.8926, with a convincing break above opening the door for buyers to challenge the 200-MA (0.8990). That being said, if 0.8880 successfully stifles buying pressure, a retest of the monthly low (0.8812) seems relatively likely. Clearing that would probably signal the resumption of the primary uptrend and carve a path to probe range support at 0.8670 – 0.8690.

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