CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

EURUSD at key inflection point

April 8, 2021 10:09 AM

EUR/USD at key inflection point

The theme driving the Euro this week has been one optimism.  After months of lockdowns and restrictions (including April), traders viewed the message from the EU earlier in the week that they expect to have most of their citizens vaccinated by the end of June as a positive for the Bloc. In addition, yesterday’s news that the European Medicines Agency (EMA) found that although there may be a link to rare cases of unusual blood clots, the total benefit-risk remains positive for the AstraZeneca shot.  However, the EMU left it up to individual countries to determine whether to use the vaccine.  See European vaccines will eventually get there and Euro high on vaccines for further analysis of Euro pairs.

After failing to break out of an inverse head and shoulders, EUR/USD reversed lower on February 25th forming a shooting star on the highs, near 1.2231.   Price moved lower in a flag formation, moving down to 1.1704.  As mentioned, the euphoric Euro moved high this week to the 38.2% Fibonacci retracement level from the February 25th highs to the March 31st lows near 1.1908 yesterday, forming another shooting star candlestick formation.  This reversal candle confluences with the 200 Day Moving Average and horizontal resistance between 1.1905 and 1.1920.  This area acts as key resistance for EUR/USD!  If the pair can hold this level, bears will be looking to offer the pair back down to the early November lows near 1.1603. 

Source: Tradingview, City Index

On a 240-minute timeframe, if bears are successful at pushing EUR/USD lower, it must first pass through horizontal support near 1.1790 and then a confluence of support at the March 31st lows and the downward sloping trendline from the February 25th highs, near 1.1704.  Notice that although the RSI pulled back from overbought conditions into neutral territory yesterday, it is currently hovering near the top of the price zone. If EUR/USD moves higher soon, the RSI should follow and move back into overbought conditions once again. 

Source: Tradingview, City Index

Strong resistance is at the previously mentioned highs between 1.1905 and 1.1920.  If bulls are able to push price above, there is another confluence of resistance between the 50% retracement level from the previously mentioned timeframe and horizontal resistance between 1.1975 and 1.1992. 

EUR/USD has been moving higher this week on optimism of a faster vaccine rollout.  However, traders need to consider when the “pricing in” the a vaccine has reached its peak.  This is true not only vs the US Dollar, but vs other currencies as well.

Learn more about forex trading opportunities.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024