EUR/USD Weekly Technical Outlook

Posted Saturday, January 5, 2019 by
Shain Vernier • 2 min read

Since the massive sell-off of Spring 2018, the EUR/USD has entered a period of relative quiet. Hysteria over a potentially aggressive U.S. FED and heated Brexit negotiations subsided for the second half of 2018, prompting tighter trading conditions. In fact, from October 1 to December 31, the EUR/USD rotated within a roughly 180 pip range.

So, what does 2019 have in store for both the EUR and USD? Below are the key events that will impact each currency:

  • Brexit: March 29th marks the official date when the U.K. leaves the E.U. with or without a final deal in place. The lead up to this event will bring heavy participation to the EUR.
  • A Flexible FED: The FED’s stated policy toward the USD is “flexible.” Most in the financial community are projecting this verbiage to translate into only two rate hikes for 2019.
  • Global Economic Slowdown: Economic growth is expected to slow in the U.S. and Eurozone over the course of 2019. In the event that this becomes a major concern, an increasingly dovish tone will be the order of the day from the FED and ECB.

In short, we may be in for even more rotational trade from the EUR/USD. With slowing economic conditions, dovish central banks, and the x-factor being Brexit, this pair may continue to move sideways for a considerable period.

EUR/USD Weekly Technicals

Every now and then it is good to take a step back and view the big picture. A look at the EUR/USD weekly chart accomplishes this task succinctly.

EUR/USD, Daily Chart
EUR/USD, Daily Chart

Here are a few levels worth keeping an eye on as next week’s trade kicks off:

  • Resistance(1): 38% Current Wave Retracement, 1.4444
  • Resistance(2): Bollinger MP, 1.1492
  • Resistance(3): Weekly SMA, 1.1537
  • Support(1): Swing Low, 1.1215

Overview: Until we see this market fundamentally change, rates are likely to continue trading sideways. The intermediate-term top appears to be the 1.1500 handle, with the Swing Low at 1.1215 set up as support. These will be two important technical areas moving forward. If rates break from this range, an extended directional move becomes a possibility by the end of Q1 2019.  

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