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Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP

Euro Talking Points:

The Euro took a punch today in global markets as the European continent saw its heaviest invasion since World War 2. While this wasn’t entirely by surprise the momentum that showed in global markets certainly does show that a full-fledged invasion wasn’t completely expected at this point. As news began to trickle in last night that Russia was making a move, a number of markets went into high-volatility mode, with both Gold and the US Dollar taking on fast gains as risk aversion flows started to show.

Those flows have largely remained through this morning, with only a slight moderation over the past couple of hours. In the major pair of EUR/USD, that USD strength was on full display as the pair pushed down to a fresh 20-month low, crossing below the 1.1120 mark that came into play in late-January.

In yesterday’s US Dollar Price Action Setups, I highlighted a brewing formation in EUR/USD as the pair continued to show digestion. I was looking for a breach on either side to lead to a run towards longer-term range support/resistance. The bearish side of that setup started to fill in last night and that led to the precipitous drop this morning, with the pair setting that fresh low.

EUR/USD Four-Hour Price Chart

EURUSD four hour price chart

Chart prepared by James Stanley; EURUSD on Tradingview

At this point a big spot of potential resistance sits ahead in the same zone that’s been in-play since November: This zone rests between two Fibonacci levels plotted at 1.1187 and 1.1212, and a show or hold of resistance in that spot keeps the door open for bearish continuation scenarios.

The next significant level above that zone is the 1.1250 psychological level, and a hold below that line similarly keeps the door open for bearish continuation scenarios. But – if buyers are able to force their way back above that level, we may have some recovery themes coming into the equation.

EUR/USD Hourly Price Chart

EURUSD hourly price chart

Chart prepared by James Stanley; EURUSD on Tradingview

EUR/JPY

EUR/JPY has spent much of the past year in a range and this recent incursion has helped the pair to push down for a support test.

From a fundamental basis – if this situation does continue to worsen the short side of EUR/JPY may be even more attractive than the short side of EUR/USD, largely on the basis of rate expectations. The Euro was recently bid on hopes of rate hikes in some point in Europe. But – if we do see continued risk aversion across global markets, then there could be more re-pricing in that theme to go along with the potential for Yen-strength.

At this point, there’s a couple of different items of support spanning from 127.23 up to 127.93, and there’s a couple of Fibonacci levels around 128.50 that are helping to hold the lows for now.

EUR/JPY Weekly Price Chart

EURJPY weekly price chart

Chart prepared by James Stanley; EURJPY on Tradingview

On a shorter-term basis, resistance potential exists around prior support, plotted at around 129.36, after which the 130.00 psychological level comes into play.

EUR/JPY Four-Hour Price Chart

EURJPY four hour price chart

Chart prepared by James Stanley; EURJPY on Tradingview

EUR/GBP

I added this as there’s some potential for Euro strength here. EUR/GBP has spent much of the past couple of months in a range-bound formation and the pair put in a recent bounce from the support side of that formation. Resistance has been a little whipper than support, but I’m marking it from the .8380 area up to .8419, keeping the door open for potential range-fill setups as we move towards the end of the week.

EUR/GBP Four-Hour Price Chart

EURGBP four hour price chart

Chart prepared by James Stanley; EURGBP on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX