Technical Check: Important EUR Pairs

EUR/GBP

Even as the EURGBP broke four-month old ascending trend-channel during its declines from 0.7930, the pair failed to extend the downside below 0.7700 – 0.7690 support-zone, which if broken can witness 50-day SMA, near 0.7660 and the 61.8% Fibonacci Retracement Level of its October 2014 – July 2015 downside, near 0.7620, as consecutive support levels. However, a surprise decision of the ECB to fall short of market expectations, concerning a cut in deposit rate and alteration to QE, might pullback the pair back to 0.7800 immediate resistance, breaking which 0.7860 and the 0.7930 are resistance levels that it could mark prior to heading towards 0.8030-50 important horizontal resistance-area. Should the pair successfully trades above 0.8050, it becomes strong enough to aim for 0.8150-60 zone. On the other hand, given the ECB announcement meet with general consensus, chances of the pair’s quick decline below 0.7620 become imminent, which in-turn opens the door for its plunge to 0.7520 and the 0.7420. If the pair stretches its southward trajectory below 0.7420, it could further drop to 0.7300 round figure mark support.

EUR/JPY

EURJPY’s failure to decisively drop below 61.8% FE of its June 2015 – January 2016 downside pulled the pair back into its eight month old descending trend-channel with 125.60-80 being immediate resistance. If the ECB’s disappointment fuel the pair beyond 125.80, also clear the 126.00 round figure mark, which becomes more likely, it can swiftly rise to 50-day SMA level of 127.30. Should the pair successfully breaks the 127.30 mark, the 128.80 and the 100-day SMA level, near 130.00, quickly followed by the mentioned channel’s resistance, at 130.20 now, might offer strong upside resistances. Alternatively, pair’s drop below channel support of 123.70 can make it re-test the 61.8% FE level of 123.00, clearing which the current month lows near 122.00 and the 121.00 may hold its intermediate south-move prior to targeting the 120.00 psychological mark.

EUR/AUD

During its sustained trade below 200-day SMA, the EURAUD dropped to the fresh lows of 2016 on Wednesday; though, it failed to close below eight month old ascending trend-line support, presently at 1.4620, and continue trading near the same mark ahead of the critical ECB decision. While chances are higher that a dovish outcome of the central banker’s meeting can fetch the pair below the trend-line support, to 1.4400 area, an unexpected result can quickly fuel it to 1.4800 nearby resistance. Moreover, pair’s recovery above 1.4800 might pass through 1.4930 and the 1.5000 mark before the 50% Fibonacci Retracement level of its April – August 2015 upside, near 1.5130, and the 200-day SMA level of 1.5240, restrict its further advance. Meanwhile, pair’s downside below 1.4400, backed by dovish ECB announcement, can fetch the prices to 1.4350 and the 1.4100 mark before the 1.4000 psychological magnet could hold its south-run confined.

EUR/NZD

Following the EURNZD’s bounce from nine-month old ascending trend-line support, forming part of broader symmetrical triangle formation, the 50-day SMA, at 1.6620 now, seems limiting the pair’s immediate upside, signaling a pullback to 61.8% Fibonacci Retracement of its May – August 2015 upside, near 1.6360. Given the ECB’s monetary easing announcement drags the pair below 1.6360, mentioned trend-line support of 1.6120 becomes an important level for the pair traders to watch, which if broken can quickly fetch the prices to 1.5850 and then to the 1.5650 support levels. Furthermore, pair’s extended southward trajectory below 1.5650 can make the pair weaker enough to test 1.5400 and the 1.4930 downside numbers. Should the ECB’s surprise propels the pair beyond 1.6620, the 1.6700 mark, comprising 50% Fibo, followed by the descending trend-line resistance, near 1.6930, can become consecutive upside levels for the pair traders to watch. If the pair manages to break above 1.6930, it is likely rallying towards 1.7240-60 horizontal resistance-area, which also includes 38.2% Fibonacci level.

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