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EUR/USD Weekly Forecast: Failed Run at 2020 Low Warns of Consolidation

Euro Talking Points

EUR/USD appears to have staged a failed attempt to test the yearly low (1.0636), and the exchange rate may face range bound conditions through the Easter holiday as it snaps the series of lower highs and lows carried over from the previous week

Technical Forecast for Euro: Neutral

The monthly opening range has been a key dynamic for EUR/USD in the fourth quarter of 2019 as the exchange rate carved a major low on October 1, with the high for November occurring during the first full week of the month, while the low for December happened on the first day of the month.

The opening range for 2020 showed a similar scenario as EUR/USD marked the high of the month on January 2, with the exchange rate carving the February high during the first trading day of the month. However, the opening range for March was less relevant amid the pickup in volatility, with the pullback from the yearly high (1.1495) producing a break of the February low (1.0778) as the exchange rate slipped to a fresh 2020 low (1.0636).

Nevertheless, the 50-Day SMA (1.0971) and the 200-Day SMA (1.1062) cast a bearish outlook for EUR/USD as both moving averages track a negative slope, but the exchange rate appears to be reversing course ahead of the yearly low (1.0636) as it snaps the series of lower highs and lows from the previous week.

EUR/USD Rate Daily Chart

EUR/USD Daily Price Chart

Source: Trading View

The recent recovery in EUR/USD unravels following the string of failed attempt to close above the 1.1140 (78.6% expansion) region, but the exchange rate appears to have marked a failed attempt to test the yearly low (1.0636) amid the lack of momentum to break/close below the 1.0780 (100% expansion) region.

In turn, EUR/USD may face range bound conditions over the coming days, with the move above the Fibonacci overlap around 1.0830 (78.6% expansion) to 1.0860 (23.6% retracement) opening up the 1.0950 (100% expansion) to 1.0980 (78.6% retracement) region.

Next area of interest comes in around 1.1040 (61.8% expansion) followed by the 1.1100 (78.6% expansion) handle.

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong