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EUR/USD Daily Forecast – Euro Tumbles to Lows Not Seen Since 2017

The single currency continued to face selling pressure in the late week, declining to lows not seen since the French election of 2017.
Jignesh Davda

EUR/USD has posted losses in eight out of the past nine sessions and the only day that it did gain reflected a minor recovery. The pair is seen testing a horizontal support level that had held it higher following the gap as a result of the French election in 2017.

The pair shows mild buying pressure in the early day from support but is poised to close the week with a notable loss. For the month thus far, EUR/USD is down about two and a quarter percent.

While the trade-weighted dollar index (DXY) has extended gains to a four-month high, the greenback has not gained broadly against the major currencies this week. Commodity currencies and the British pound all show gains against the greenback with Sterling rising just over 1% versus the dollar.

Inflation data out of the United States pointed to a small decline in prices in January from the prior month, however, annual CPI increased by 2.5% which was the largest year over year rise in the index in more than a year. Excluding volatile items such as food and energy, CPI rose 2.3% in the year to January.

Later in the North American session today, the latest retail sales figures will be released from the US.

Technical Analysis

EUR/USD shows important support on multiple time frames and is showing signs of recovering in the early day.

EURUSD Hourly Chart

On an hourly chart, the pair has been held higher by the lower bound of a rising trend channel that has encompassed prices since the turn at the end of last month.

Further support is seen on a weekly chart as a horizontal level near 1.0833 served to hold the pair lower ahead of the French election in April 2017 and had then acted as support following the election.

It should be noted that the momentum is strong to the downside and that EUR/USD has struggled to recover on several attempts since the start of the month.

Upside resistance for the pair is found at the upper bound of the declining trend channel, currently around 1.0870.


Bottom Line

  • EUR/USD continues to show strong downside momentum.
  • An important technical level is in play that previously acted as both support and resistance in 2017.
  • US retail sales figures will be reported in the North American session.
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