The Euro has been one of the star performers of 2017. We will try to determine its main drivers of strength, as well as its potential outlook going forward.
The Euro has been one of the star performers of 2017. We will now try to determine its main drivers of strength, as well as its potential outlook going forward.
Following its recent strong run, where does the Euro go from here based on fundamentals? Let’s take each point in turn.
It’s undeniable that the Euro has had a stellar run in 2017. Looking into the fundamentals reasons behind this move, however, it’s hard to identify solid reasons why its strength should persist significantly. Having said that, the trend is intact and momentum is strong. The EURUSD, in particular, is now at a crossroad that will dictate which way the next 500 pips are going.
From a macro viewpoint, we think that it’s too late to enter long Euro positions. If strength continues further than the accumulation of short Euro positions will start making a lot of sense.
The EURUSD bottomed at the 1st day of this year (unsurprisingly since we have made plenty of mentions to the importance of seasonality) and rallied almost 17% since. During this rally, it has broken above multiple resistance levels with the most important one being the confluence of the large descending channel that held it in a range since the beginning of 2015 and the horizontal resistance at 1.1450 (look at the weekly chart). Yesterday we popped above the 127% Fib from the last move lower (May 2016 to the low) and came near to testing the ascending T/L resistance that has guided the uptrend since March 2017 before turning around and posting a key reversal candlestick. Today’s continuation is forming an evening star formation which adds credibility to the corrective scenario. The 1st support area is at 1.1730 which is the confluence of the broken bull flag resistance (expected to
Yesterday we popped above the 127% Fib from the last move lower (May 2016 to the low) and came near to testing the ascending T/L resistance that has guided the uptrend since March 2017 before turning around and posting a key reversal candlestick. Today’s continuation is forming an evening star formation which adds credibility to the corrective scenario. The 1st support area is at 1.1730 which is the confluence of the broken bull flag resistance (expected to be supported) and the ascending T/L support. As long as we trade above 1.1450 we expect the move lower to prove corrective.
This article was written by one or more of the following contributors: Blake Morrow, Nicola Duke, Grega Horvat, Steve Voulgaridis and Stelios Kontogoulas. They are all analysts at ForexAnalytix which provides macro & technical analysis for various financial instruments. Forex Analytix primary goal is to educate traders of all experience levels and to provide a wide range of tools which can help with their trading decisions.