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Euro Technical Outlook – EUR/USD and EUR/NOK on Diverging Paths

Euro, EUR/USD, US Dollar, EUR/NOK, Norwegian Krone – Talking points

  • EUR/USD makes lower lows as momentum seeks to re-assert itself
  • A solid rally for EUR/NOK might carry some risks as volatility ticks up
  • Different directions for Euro against USD and NOK might provide opportunities

EUR/USD TECHNICAL OUTLOOK

EUR/USD made a fresh 2 -year low yesterday as it broke below recent lows and a descending trendline.

The consistently of making lower lows and lower highs could suggest that a bearish trend environment remains in play.

The last few sessions have seen the price move back below the 10-day simple moving average (SMA) and this could indicate that short-term bearish momentum has re-accelerated.

A bearish triple moving average (TMA) formation requires the price to be below the short term 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.

The 10-, 21-, 34-, 55, 100- and 200-day SMAs all lie above the price and have negative gradients. Using any combination of these SMAs they are all in correct order to meet the criteria for a TMA.

Nearby resistance could be at the pivot point of 1.0758. Further up, there might a resistance zone at 1.0923 – 1.0945, where there are a couple of pivot points, a previous high and the 34-day SMA.

A descending trendline is also near the 55-day SMA near 1.1030, which may offer resistance.

The March 2020 low of 1.0638 could provide support and a break below there might open up a run toward the January 2017 low of 1.0340. A move below 1.0340 would be the lowest level EUR/USD has traded at since 2003.

EUR/USD CHART

Chart Created in TradingView

EUR/NOK TECHNICAL ANALYSIS

EUR/NOK has rallied over 2% in the last few days, piercing several resistance levels.

On this move, it was unable to close above the peak seen earlier this month at 9.7645 and the 55-day simple moving average (SMA), currently at 9.7693. These levels may continue to offer resistance.

The move did break above the upper band of the 21-day simple moving average (SMA) basedBollinger Band and closed outside it. If a close is observed back inside the band, it might signal a reversal.

The width of the bands has begun to expand after a period of consolidation saw them narrow. This may indicate accelerating volatility for the cross rate.

Support could be at the prior resistance level of 9.7201 or the 5- and 21-day SMAs, currently at 9.6761 and 9.5914 respectively.

EUR/NOK CHART

Chart Created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter