Top Story

EUR/USD edgy ahead of French elections

The EUR/USD formed a key technical reversal pattern yesterday. As a result, it has been unable to climb higher despite the release of mostly stronger-than-expected Eurozone PMIs this morning, although German services PMI unexpectedly dipped to 54.7 from 55.6. Investors are evidently cautious ahead of Sunday’s French elections: not only has the euro fallen but European equity markets were also flat across the board this morning, despite that sharp rally on Wall Street yesterday.

The EUR/USD formed a key reversal pattern on its daily chart yesterday, namely a doji candlestick pattern at key resistance around the 1.0775 area. As well as this being an old support level, the 61.8% Fibonacci retracement against this year’s high also converged here. This morning, the low from Thursday’s reversal candlestick pattern has broken down, and we are seeing some follow-through in the selling pressure. The old support level at 1.0735 turned into resistance earlier and this is where today’s high (so far) has been formed. Looking ahead, the next support is not that far off now at 1.0670. This level was previously resistance and so we may get a bounce upon a potential retest.

Generally speaking though, the EUR/USD continues to trade inside an ugly range. My longer-term outlook on the EUR/USD is neutral for now but will turn decidedly bearish if and when that old support area of 1.0460-1.0525 breaks down. Until and unless that happens, there is always the possibility for sharp short-squeeze bounces as we have seen throughout Q1. 

Source: FOREX.com

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. GAIN Capital Group, LLC is a registered Futures Commission Merchant and Retail Foreign Exchange Dealer with the Commodity Futures Trading Commission (CFTC)and is a member of the National Futures Association (NFA # 0339826) in the US, GAIN Capital UK Ltd is authorised and regulated by the Financial Conduct Authority (FCA) in the UK, GAIN Capital Australia Pty. Ltd is regulated by the Australian Securities and Investment Commission (ASIC) in Australia, and GAIN Capital Japan Co. Ltd is authorised and regulated by the Financial Services Agency (FSA) in Japan. Please read Characteristics and Risks of Standardized Options.