EURUSD traders watching last weeks high and low for guidance

As US traders returned to their desks this morning, the dominant theme was US dollar weakness. The US Dollar Index, which had rallied to above 95.00 to approach its highest level in over 10 months last week, was hit by a bout of selling in Asian and early European trade to hit its lowest price in a week and a half in the mid-93.00s.

Over the weekend, political leaders from various G7 nations criticized and condemned the Trump administration’s decision to impose tariffs on the country’s allies, suggesting that the simmering global “trade war” could get worse before it gets better. Traders will be keeping a close eye on comments out of this weekend’s G7 summit to see whether the US will soften its stance, as well as any signs of escalation from other countries.

Meanwhile, the euro has caught a bid today after some decent unemployment data out of Spain, where the unemployment rate has dropped a full 10% over the last five years (from 27% to 17%). At the same time, the FX market remains optimistic ahead of the first EU ministerial meeting for the new Italian political leaders tomorrow. For now, traders believe that the populist government is willing and able to pursue its agenda within the current structure of the Eurozone, and given the stakes, Mr. Di Maio and company may be hesitant to “rock the boat” too much.

After shedding over 1,000 pips off its high in mid-February, EUR/USD bulls are finally trying to put a floor under the pair. As the chart below shows, the world’s most widely-traded currency pair briefly dipped to a 10-month low before seeing a strong bullish reversal last Wednesday. The pair has since broken its 6-week bearish trend line, potentially opening the door for a more meaningful rally this week.

Source: Forex.com, TradingView

That said, the greenback has staged a bit of a rally this afternoon, showing that dollar bulls (EUR/USD bears) are defending the previous-support-turned-resistance level around 1.1730. For now, the pair has yet to see a meaningful higher high & higher low form on a closing basis, leaving the short-term trend murky.

A close above the 1.1730 area in the next few days would open the door for a more substantial rally toward 1.19 or 1.20 in the days to come. Meanwhile, a close back below the December lows at 1.1550 would suggest that the medium-term downtrend has resumed and would likely expose 1.14 or lower next.

In other words, EUR/USD traders will be watching for a confirmed break of the high and low of last week’s wide-bodied candle to guide their decisions in the weeks to come.

The information on this web site 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. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor