EUR/USD Weekly Technical Analysis – Holding 1.1886 Key to Sustaining Rally

The Euro finished higher against the U.S. Dollar last week as investors reacted to strong Euro Zone economic data and a dovish outlook for U.S. interest rates.

The EUR/USD settled at 1.1924, up 0.0137 or +1.17%.

The EUR/USD hit its highest level since September 25 while posting the third straight week of gains and the second straight 1 percent weekly gain.

While U.S. markets were closed on Thursday, Euro Zone business growth surveys showed surprise growth, supporting the European Central Bank (ECB) move last month to announce a throttling back to its monetary stimulus. On Friday, the German Ifo Business Climate rose to 117.5, beating the 116.6 estimate.

Minutes from the ECB’s latest policy meeting, released on Thursday, showed policymakers had broadly agreed on extending their quantitative easing scheme, albeit at a lower level, but keeping asset purchases open-ended appeared to generate fiercer debate.

Weekly Technical Analysis

The main trend is down according to the weekly chart, However, momentum shifted to the upside the week-ending November 10 with the formation of a potentially bullish closing price reversal bottom.

A trade through 1.2092 will change the main trend to up. A move through 1.1553 will signal a resumption of the downtrend.

The short-term range is 1.2092 to 1.1553. Its retracement zone is 1.1822 to 1.1886. Closing on the strong side of this zone is also giving the EUR/USD a bullish upside bias.

The major range is 1.3993 to 1.0339. Its retracement zone at 1.2166 to 1.2597 is the primary upside target.

Weekly Technical Forecast

Based on last week’s close at 1.1924, the direction of the EUR/USD this week will be determined by trader reaction to the short-term Fibonacci level at 1.1886.

A sustained move over 1.1886 will indicate the presence of buyers. This could trigger a fast rally into a pair of downtrending angles at 1.1972 and 1.2032. The latter is the last potential resistance angle before the 1.2092 main top. This top is followed by the major 50% level at 1.2166.

The major 50% level at 1.2166 is the trigger point for an acceleration to the upside.

A sustained move under 1.1886 will signal the presence of sellers. This is followed by the short-term 50% level at 1.1822 and short-term uptrending angles at 1.1793, 1.1673 and 1.1613. The latter is the last potential support angle before the 1.1553 main bottom.