Euro to Dollar Exchange Rate to Find Next Support Level at 1.0665

With the euro in decline against the US dollar, we consider where the selling pressure may come to an end.

The 2016 high in the euro to dollar exchange rate stands at 1.1376 which was achieved as markets became concerned that the US was potentially heading back into recession.

Ultimately the fears proved unfounded and the dollar recovery has been strong - the euro has fallen for 14 of the last 17 days confirming the establishment of a negative trend.

“The decline below 1.1060 was a short-term negative for EUR/USD and finally opened the way to the 1.0810/1.0711 support area,” notes Piet Lammens, analyst with KBC Markets in Brussels.

Ralf Umlauf of Helaba Research pointed to bearish technical indicators and the potential for “a robust ADP (employment change) reading,” providing the dollar with a “tailwind”:

“EUR-USD remains under pressure from a technical perspective and the support at 1.0850 (61.8% level) is at risk. Given the intact sell signals generated by the MACD and DMI on the daily chart, risks are expected to predominate. Below the above-stated level, we see potential through to the next supports at 1.0810 and 1.0777. In addition, a robust ADPreading should be a tailwind for the US dollar. Our favoured trading range: 1.0777 - 1.0970.”

SocGen’s Juckes expects the advent of more risk appetite to pressure the euro:

“A risk-on world with rising Treasury yields is not going to help the yen, and the contrast between the US and Eurozone data is going to keep up the pressure on the Euro, even if EUR/USD 1.08 remains a significant hurdle.”

Not all analysts are bullish the dollar versus the euro – Swissquote’s FX team see the dollar’s bull run as, “coming to an end”:

“After falling 4.50% since mid-February, EUR/USD was treading water at around 1.0875. In our opinion, the dollar bull run is coming to an end as traders adjust their positions to the more stable environment. On the downside, the 1.0711 level will act as a strong support, while on the upside the closest resistance can be found at 1.0965 (previous highs and Fibonacci 61.8% on Jan.-Feb. rally).”

The PSL view is that the down-trend remains intact but the current move lower is a little overextended and may pause to consolidate before resuming.

EUR/USD pair has found support at 1.0855 where an old trend-line is situated.

It has fallen from the 1.1376 highs in a three wave corrective A-B-C pattern, which has now completed.

A break below the trend-line and below the 1.0800 level would help confirm a resumption of the down-trend, to the next target at the S1 Monthly Pivot at 1.0665.

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