• EUR fades spike to a fresh 3-year high of 1.2323.
  • Inside day doji candle indicates bull market exhaustion/indecision in the marketplace.
  • German political uncertainty, dovish talk from the ECB could hurt the EUR.

The EUR/USD rose to a fresh three-year high of 1.2323 a few minutes ago only to fall back below 1.23 levels, indicating the overbought technical conditions are likely coming into play.

The failure to hold above 1.23 levels adds credence to bull market exhaustion shown by yesterdays inside day doji candle. A close today below 1.2195 would confirm bearish doji/bearish inside day candle reversal and could yield a deeper pullback in the EUR/USD in the short-term.

A 100-pip drop from the current level of 1.2290 cannot be ruled out, given the European Central Bank is unlikely to ditch a pledge to keep buying bonds at next week's meeting. Three sources close to the matter told Reuters that rate-setters need more time to assess the Euro exchange rate and an outlook for the economy. Also, In an interview published late on Tuesday, Bundesbank head and ECB's Governing Council member, Jens Weidmann, seemed to rule out a rate hike this year.

Further, the uncertainty surrounding the German Chancellor Merkel's ability to form a coalition government could also become a reason for the technical pullback in EUR/USD.

That said, the dips could be short-lived unless there is a sudden and significant rise in the 10-year US-German bond yield spread.

EUR/USD Technical Levels

A move above 1.2323 (Asian session high, 3-year high) would open doors in 1.2377 (161.8% Fib extension of the November low-high-December low) and 1.24 levels (zero levels). On the downside, a break below 1.2254 (session low) could yield pullback 1.2209 (5-day MA) and 1.2195 (previous day's low).

15M Bearish Neutral High
1H Bullish Overbought Expanding
4H Bullish Neutral Low
1D Bullish Overbought High
1W Overbought Shrinking


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content

Recommended content

Editors’ Picks

AUD/USD clings to gains above 0.6900 amid damp mood

AUD/USD clings to gains above 0.6900 amid damp mood

AUD/USD is holding onto the recovery mode above 0.6900 amid a risk-off mood during Monday’s Asian session. The Sino-American tension over Taiwan and aggressive Fed tightening bets challenge the pair buyers after Friday's US NFP blowout. 


EUR/USD: Bears moving in across the timeframes

EUR/USD: Bears moving in across the timeframes

The EUR/USD price on the weekly chart has corrected to a 50% mean reversion of the prior weekly sell-off. Last week's sell-off could be the start of the bearish extension. On the daily chart, the price has left behind a failed inverse head and shoulders.


Gold slides towards $1,750 as Fed, Taiwan concerns favor DXY bulls

Gold slides towards $1,750 as Fed, Taiwan concerns favor DXY bulls

Gold price remains pressured near $1,773, down 0.10% intraday, as risk-aversion underpins the US dollar’s safe-haven demand during Monday’s Asian session. Also keeping the greenback buyers hopeful are the recently increased hopes of Fed 0.75% rate hike in September.

Gold News

LUNA price approaches a launchpad, but will buyers come together?

LUNA price approaches a launchpad, but will buyers come together?

LUNA price is in cooling down after its recent 41% explosive move. A bounce off the $1.85 to $2.08 demand zone could induce another rally to 2.80. A daily candlestick close below $1.85 will invalidate the bullish take.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!