EUR/USD Coiled for a Breakout, Near-Term Bias Bearish Below 1.1260
Matt Weller, CFA, CMT May 14, 2019 2:48 PM
Today’s relative calm gives us chance to reset the technical outlook for the world’s most widely-traded currency pair. From a longer-term perspective, EUR/USD remains in a well-defined downtrend since peaking back in September...
Risk appetite is stabilizing today, with most major currencies consolidating in tight ranges against one another (though the pound is showing a touch of relative weakness as my colleague Fawad Razaqzada noted earlier).
Today’s relative calm gives us chance to reset the technical outlook for the world’s most widely-traded currency pair. From a longer-term perspective, EUR/USD remains in a well-defined downtrend since peaking back in September. Rates briefly dropped to an almost 2-year low near 1.1100 in late April, but bears were unable to maintain that breakdown, and the unit is now consolidating within an ascending triangle pattern:
Source: TradingView, FOREX.com
As the chart shows, the key near-term resistance level to watch is near 1.1260, which has capped rates on three occasions in the last three weeks. Meanwhile, the MACD indicator remains in the middle of its bearish range, signaling consistent bearish momentum.
Looking ahead, EUR/USD’s technical setup is relatively clear: the longer-term bearish trend remains the dominant feature, favoring sell trades on any near-term bounces. At this point, it will take a break above the triangle top near 1.1260, accompanied by a corresponding breakout in the MACD indicator, to erase the market’s bearish bias.
If rates consolidate through the rest of the day, readers should look to tomorrow’s German GDP and US retail sales reports as possible catalysts for a breakout.
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.