Technical Update - EURUSD downtrend potential to 1.0660, medium-term lower. Dollar Index eyeing 107 Technical Update - EURUSD downtrend potential to 1.0660, medium-term lower. Dollar Index eyeing 107 Technical Update - EURUSD downtrend potential to 1.0660, medium-term lower. Dollar Index eyeing 107

Technical Update - EURUSD downtrend potential to 1.0660, medium-term lower. Dollar Index eyeing 107

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

  • EURUSD after being rejected at key resistance downtrend has resumed with downside potential to 1.0660 short-term. Medium-term potential to around 1.05

     

  • The Dollar Index's recent close above 104.84, coupled with a supportive RSI, signals a continuing uptrend with potential to around 1.07

EURUSD experienced a rejection at the 0.618 Fibonacci retracement level at 1.0883, which was followed by a massive sell-off triggered by the latest US CPI numbers.
The strength indicator RSI has been reflecting negative sentiment since mid-March, hinting that the recent bullish movement was likely a corrective phase rather than a trend reversal (as disccussed in previous Technical Updates)

Currently, EURUSD is testing the 2nd April lows at 1.0723. There might be a brief rebound, but the overall expectation is that selling pressure will resume. A break below 1.0720 could lead to a further sell-off towards the 1.382 Fibonacci projection and support at 1.0660. To counter this bearish outlook, a close above 1.0885 is required.

Medium-term Outlook:
Should EURUSD close this week at or below its current levels, it would confirm a bearish breakout from the triangle-like pattern observed on the weekly chart.
Applying Fibonacci projections from the October 2023 lows to the December 2023 highs, the 0.618 retracement at current levels is crucial. The next key level would be the 0.786 retracement at 1.0596, nearing the October 2023 low at 1.0448.

This level aligns closely with the 0.382 Fibonacci extension of the triangle's top to bottom at 1.0475 (red Fibonacci lines and the vertical arrows)
A break below the October 2023 lows at 1.0448 could precipitate a sell-off towards the 0.618 extension at 1.0280, marking a significant downward movement

eurusd d 1104
Source all charts and data: Saxo Group
eurusd w 1104

The Dollar Index has exhibited bullish momentum, closing above 104.84 and reinforcing an uptrend that commenced around a week ago.

The RSI's movement above the 60 threshold confirms this bullish trend, suggesting strength in the upward movement.

Short-term, the Dollar Index is anticipated to progress towards the 1.764 Fibonacci projection and resistance around 105.75. A trend reversal would necessitate a close below 103.65.

Medium-term Outlook:
Looking ahead, the Dollar Index has the potential to reach the October 2023 highs at around 107.05. This bullish scenario hinges on the weekly RSI closing above the 60 threshold, which would indicate positive sentiment.
Resistance is expected near the 0.786 Fibonacci retracement level at 105.61.

Conversely, a weekly close below 102.30 would invalidate the medium-term bullish trend, signaling a reversal with downside potential to 100.32

dollar d 1104
dollar w 1104

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.