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EUR/USD

In the Euro/Dollar trend, since the introduction of Euro in January 1999, we can notice, as a whole, 3 different macro-phases:

Phase I (Jan 1999-Apr 2002): fall, consolidation and re-accumulation.

After being exchanged in the 1.1800-1.9000 area, just after the start of transactions in January 1999, the pair EurUsd fell to a historical low at 0.8231 on October 26th, 2000. From that level, there was the developing of an accumulation phase, that went on until April 2002.

Phase II (May 2002 – Jul 2008): euro-rally.

Since May 2002, we went through a long phase dominated by a strong euro – or, better to say, by a weak dollar – that brought the pair to a historical high at 1.6038 (+95% from the bottom) on July 15th, 2008.

Phase III (Aug 2008 – today): bounce and stabilization of the US Dollar.

Along with the worsening of the financial crisis, the US dollar begins strengthening, touching a peak vs. euro on June 7th 2010 at 1.1876. Then the pair has been moving erratically, with a recovery towards 1.4940 in May 2011 and a fall reaching a bottom in July 2013 around 1.2040 due to the increasing tensions in the euro-area peripheral countries’ sovereign debts. Since August 2012 – along with a progressive cheering-up within the euro-zone and the concomitant further Fed’s quantitative easing – the euro has been rallying steadily, reaching the key resistance area 1.3870-1.4000 (high 1.3994 on May 8th 2014).

The missed overcome of 1.4000 in May 2014 determines a strong correction of the euro, with a fast decline below the strong support area 1.2920-1.3000 in September 2014, followed by a downward acceleration in the last months in direction of the key support area 1.1640-1.1876 (lows of December 2005-June 2010). The trend of the euro against the Us dollar in the last 6 years has been characterized, as a whole, as weak-sideways, and is worsening.

The pair has fallen to the June 2010 lows and the weekly technical outlook remains very weak. A bounce from the current levels would find a strong resistance in the 1.2500-1.2600 area. A break below the key support area 1.1640-1.1876 (currently under test) would open the way to a further strong decline in the euro for the coming months too, with a first important target at 1.1400, then 1.1100 and eventually area 1.0500-1.0765. The downward risk would diminish in case of a fast recovery of the pair above 1.2600-1.2800 (not very likely), but would disappear only above 1.3000 (unlikely). 

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TREND

SUPPORTS

SPOT PRICE

RESISTANCES

Trend 3-6 months

down

S1

1.1876+

1.1936

R3

1.2800++

Trend 6-12 months

down

S2

1.1640++

R2

1.2600+

Trend 12-18 months

down

S3

1.1400+

R1

1.2300

 

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Maurizio Milano