Matt Weller, CFA, CMT
Faraday Research
Risk appetite is stabilizing today, with most major currencies consolidating in tight ranges against one another (though the pound is showing a touch of relative weakness as my colleague Fawad Razaqzada noted earlier).
Today’s relative calm gives us chance to reset the technical outlook for the world’s most widely-traded currency pair. From a longer-term perspective, EUR/USD remains in a well-defined downtrend since peaking back in September. Rates briefly dropped to an almost 2-year low near 1.1100 in late April, but bears were unable to maintain that breakdown, and the unit is now consolidating within an ascending triangle pattern:
Source: TradingView, FOREX.com
As the chart shows, the key near-term resistance level to watch is near 1.1260, which has capped rates on three occasions in the last three weeks. Meanwhile, the MACD indicator remains in the middle of its bearish range, signaling consistent bearish momentum.
Looking ahead, EUR/USD’s technical setup is relatively clear: the longer-term bearish trend remains the dominant feature, favoring sell trades on any near-term bounces. At this point, it will take a break above the triangle top near 1.1260, accompanied by a corresponding breakout in the MACD indicator, to erase the market’s bearish bias.
If rates consolidate through the rest of the day, readers should look to tomorrow’s German GDP and US retail sales reports as possible catalysts for a breakout.
This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.
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