EUR/USD Forex Technical Analysis – In Position to Test Tops at 1.2033 and 1.2092, Major 50% Level at 1.2166

The Euro finished on a strong note on Friday, driven higher by a weaker U.S. Dollar. Investors are also optimistic about the outlook for the Euro Zone economy in 2018 and the possibility the European Central Bank may tighten further by reducing stimulus after September.

The dollar is under pressure due to worries that planned Fed rate hikes in 2018 and the new tax reform plan will have little impact on the growth of the U.S. economy.

The EUR/USD settled at 1.2001, up 0.0059 or +0.49%.

The main trend is up according to the daily swing chart. The uptrend was reaffirmed last week when buyers took out the pair of tops at 1.1940 and 1.1961. The strong close at 1.2001 has put the EUR/USD in a position to challenge the September 20 main top at 1.2033. This is followed by the September 8 main top at 1.2092.

The major long-term range is 1.3993 to 1.0339. Its 50% level at 1.2166 is the primary upside target.

The main range is 1.2092 to 1.1553. Its retracement zone is 1.1886 to 1.1823. Crossing to the strong side of this zone is helping to give the EUR/USD a strong upside bias.

Breaking back under the former tops at 1.1961 and 1.1940 will be the first signs of weakness. This will indicate that last week’s breakout rally was fueled by short-covering rather than aggressive new buying.

The first major support level is the main Fibonacci level at 1.1886, followed by the main 50% level at 1.1823.

Due to the prolonged move up in terms of price and time, the chances of a potentially bearish closing price reversal top forming will increase as the EUR/USD approaches 1.2033 to 1.2092 and 1.2092 to 1.2166.