EUR/USD Peaked Above $1.3100 After Completing 375 Pips Advance In 5 Sessions

Includes: ERO, EU, EUO, FXE
by: FXstreet

The EUR/USD is currently consolidating levels above the $1.3050 following the bullish movement performed in the early Wednesday session. The EUR/USD posted the highest level since March 8th at $1.3120 in Asia, but the pair was unable to keep the $1.3100, retracing towards the current $1.3070 area throughout the European and American sessions.

The euro closed its first negative day in the last six sessions as the currency market was dominated by risk aversion. But in the last five sessions, the EUR/USD advanced 375 pips from April 4th bottom at $1.2745 to the current high at $1.3120.

Closing 0.11% below on the day, the EUR/USD is strongly bearish according to our trend index. Indicators such as MACD, CCI and Momentum are bearish while the Stochastic is bullish. As for the short term, next support is at $1.3050 (Wednesday's low) ahead of $1.3006 (low of April 9) and $1.2963 (low of April 8). On the upside, a breach of $1.3135 (high of March 8) would expose $1.3163 (high of February 28) and then $1.3229 (50% of the February-April slide).

According to FXTimes analyst Fan Yang, the EUR/USD is set to extend gains. "EUR/USD continues to reverse against the $1.3710-$1.2744 decline that formed throughout March. So far in April, the EUR/USD has made a 38.2% retracement, cracking the $1.31 handle as seen in the 4H chart," points out Yang. The "EUR/USD is still in its first swing that broke above a double bottom, though the structure is more like a diagonal triangle now," the analyst concludes.

In line with Yang's analysis, more upside aggressive targets for the rest of this week and the next are the 50% retracement at $1.3227 and the 61.8% retracement at $1.3340.

Scotiabank sees more bullishness ahead in the majors pairs, the Scotiabank strategists agree that the market needs to see resistance of key levels (50D MA and the 38.2% Fibonacci) for new highs. However, UBS Strategists Gareth Berry and Geoffrey Yu believe that there is a generally neutral-trending bias ahead. The EUR/USD maintains a neutral outlook, as there is a strong resistance at $1.3115. Meanwhile, "a closing break above this would extend the recovery to $1.3228."

The Thursday ahead:

Looking into Thursday's calendar, consumer prices in Germany and France will precede the ECB Monthly Report ahead of 3-year bond Italian auction. In the U.S. economy, Imports/Exports Prices are due as well as the weekly report on the labor market.

Earlier in the day, the unemployment data in Australia will be a challenge for the fresh 11-week highs at $1.0550 reached on Wednesday.

  • ECB Monthly Report

  • US Initial Jobless Claims

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.