EUR/USD: Is the long-term uptrend over?
Matt Weller, CFA, CMT February 17, 2021 5:36 PM
The longer-term EUR/USD uptrend is at risk - see the key levels for FX traders to watch!
As my colleague Joe Perry eloquently noted this morning, we’ve seen a dose of strong US data this morning, boosting the US dollar. Meanwhile, the euro is one of the day’s weakest major currencies on the back of a weak construction report and downbeat economic comments from new Italian PM Mario Draghi.
Looking at the chart of EUR/USD, rates are trading back near the psychologically-significant 1.20 level after putting in a series of lower highs and lower lows so far this year; rates have only closed below the widely-watched 1.20 handle once since November. Taking a longer-term perspective, the world’s most widely traded pair is also approaching its 100-day EMA, which has provided strong support since last June:
Source: TradingView, GAIN Capital
In other words, the longer-term EUR/USD uptrend is at risk, with a potential break and close below the 3-month low at 1.1950 (if seen) signaling that the momentum has shifted in favor of the bears and hint at a move toward 1.18 or lower next. One sign that astute readers may want to watch as a possible leading indicator is the 14-day RSI. The indicator hasn’t dipped into “oversold” territory (< 30) since February, so a breakdown in that oscillator could serve as an early signal that the exchange rate itself is vulnerable to a breakdown.
Of course, we never want to become too focused on just one outcome. For bulls to regain the upper hand, we’d need to see EUR/USD break above its one-month high near 1.2175, a development that could pave the way for a continuation up toward 1.2350 resistance in the coming weeks.
Learn more about forex trading opportunities.
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.