Euro technical outlook - EUR/USD, EUR/CHF vulnerable if momentum re-asserts
EUR/USD appears likely to test the lower end of a six-week range; EUR/CHF has inched below recent support but follow through is lacking and bearish momentum might be unfolding for Euro.
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EUR/USD technical outlook
Since the end of February, EUR/USD has been caught in a 1.0806 – 1.1185 range. The lower bound of the range is the lowest since May 2020. While the sell-off has paused over the last month, bearish momentum might be re-emerging.
A bearish triple moving average (TMA) formation requires the price to be below the short term simple moving average (SMA), the latter to be below the medium term SMA and the medium term SMA to be below the long term SMA. All SMAs also need to have a negative gradient.
When looking at the 10-, 21-, 34-, 55-, 100- and 200-day SMAs, the criteria for a TMA have been met using any combination of these SMAs. Support could be at the recent low of 1.0837 and a breach of that level could see the March low of 1.0806 tested. Below there, the March 2020 low of 1.0636 may provide support.
On the topside, potential resistance might be at the previous highs and pivot points of 1.0945, 1.1138, 1,1185. Further up, resistance could be at 1.1274, 1.1280, 1.1396, 1.1483 and 1.1495.
Resistance may also be at the descending trend line, currently dissecting at 1.1100. The SMAs themselves are also possible resistance levels.
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EUR/CHF technical analysis
EUR/CHF has a similar set-up to EUR/USD. The intra-European cross rate rallied from a low of 0.9973 in early March and is now looking to potentially re-affirm a descending trend. That low in March was the lowset EUR/CHF has traded at since the Swiss National Bank (SNB) abandoned protecting the so-called ‘Swissy’ from what it perceived to be overvaluation in 2015.
Looking at the 10-, 21-, 55-, 100-, 200-day SMAs, the TMA criteria has been met. The price is currently looking for a possible break below 1.0132, a support that has held for the last week. The next level of support might be at 0.9973.
On the topside, resistance could be at the prior highs of 1.0385, 1.0402 and 1.0448. Closer by, the descending trend lines may also offer resistance, currently dissecting at 1.0250, 1.0260 and 1.0310. The latter coinciding with the 55-day SMA.
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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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