Top Story

EUR/USD Spikes Higher In Asia - A Sign Of Things To Come?

Around 1am London, EUR/USD spiked higher and, upon closer inspection saw the bid for Euro was broadly based. This leaves a potential bullish breakout on the cards for UK or US trading session ahead of the weekend.

Whilst the driver is currently unknown, it may be related to Jerome Powell reportedly asserting “Fed independence” at a Democrats’ retreat, or ‘unnamed sources’ claiming Powell thinks rates are in the right place. However, whilst some USD crosses traded lower, it was not as broad-based as the strength seen on Euro. Anyway…

Since our prior post, EUR/USD has bounced from key support and recouped around 0.75% since the low. That said, the magnitude of the bounce is a little underwhelming, having taken 8 days to achieve it. The 1.14 target we previously floated assumed the underlying characteristics of the choppy decline remained unchanged. Given the lacklustre nature of the ‘rebound’, the underlying characteristics of the decline have changed, so we need to be more flexible with our view and perhaps consider a lower, bullish target on the daily.

From here, two potential scenarios stand out as worthy of monitoring:

  1. A bullish breakout on the hourly chart (with an inverted head and shoulders pattern)
  2. A breakdown of a bearish flag on the daily chart

The hourly chart is carving out a potential inverted head and shoulder pattern, which is a continuation pattern in an uptrend. A bullish channel is being carved out, with the ‘Fed minutes spike’ providing a prominent low around 1.2280 and the right shoulder (RS) providing a higher-high at 1.1248. Today trade has seen a pickup of bullish momentum towards the 38.2% retracement level and, if successful, the inverted head and shoulders projects an approximate target around near the 61.8% Fibonacci level.


The daily chart continues to grind higher, but if bearish momentum is to sufficiently return, we can monitor its potential for a bear flag. With momentum bullish on intraday timeframes, this is on the backburner for now, but we’ll update accordingly if this starts to play out.


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account