Euro technical outlook - EUR/USD stalls while EUR/JPY gains

EUR/USD technical analysis

After failing to break below the January 2017 low of 1.0340, EUR/USD has staged a rally that has broken back above a descending trend line.

This move has seen the price set up a potential island reversal. While it has so far made a move above a break point at 1.0638, a clean break above 1.0758 is needed to confirm the potential of the reversal.

It tried to move above 1.0758 but failed and now has a descending trend line near that historical break point (1.0758) and the recent high of 1.0787 to overcome in order to re-iterate a potential reversal.

If it breaks above those resistance levels, it may push toward further resistance at 1.0936 and 1.0945.

An island reversal in stock prices would see a few candlesticks in isolation from the rest of the price. This is because the stock price closes at the end of each trading day for the night and then re-opens the next morning, allowing for gaps in the price chart.

FX markets roll from one close immediately into the next day open at 5pm New York time, Monday to Friday. This means that the gap in FX pricing for an island reversal still sees a body in the candlestick.

Support could be at 1.0638 or the previous lows of 1.0627, 1.0349 and 1.0340.

EUR/JPY technical analysis

EUR/JPY has made a 7-year high today with Yen weakness remerging. After breaking below an ascending trend line last month, it has established a new ascending trend line.

In this move, the cross rate broke the topside of a Pennant formation.

Momentum appears to have re-accelerated with the 10-, 21-, 55- and 100-day simple moving average (SMA) all below the price and exhibiting positive gradients.

There looks to be a lot of clean air before the December 2014 peak of 149.78.

Previous points of resistance might now be support levels at 141.06, 140.00, 139.02 and 138.32.

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.