EURUSD Technical Analysis – Where is the Euro Headed in 2019?

EURUSD Technical Analysis – Where is the Euro Headed in 2019?


It’s been a really quiet time for euro
US dollar in recent months, but I don’t think this is going to carry on. So in this
video we’re gonna take a look at the big levels to keep an eye on. Hello, I’m David
Jones from capital.com and I thought it was time for a catch-up on the most
popular traded foreign exchange pair EUR/USD. In recent months we have
seen volatility really drop off for the euro, you know it’s normally a pretty
active market but we haven’t seen that over the last three to four months or so.
So I thought, well, let’s take a look at the euro in a bit more depth because
there’s a really big level to watch, I think, in the weeks ahead, that could
determine the direction of the euro against the dollar for the rest of this
year. So let’s catch up first of all. We’ll take a look at the movements over
the last 12 months and we’ll look at the charts in a bit more depth and see where
the opportunities may be for EUR/USD. in the months to come. Let’s take
a look at the numbers for EUR/USD. So over the last 12 months,
to the middle of February 2019, the price has dropped just over 9%. So over the
last 12 months we have seen US dollar strength, euro weakness. We’ve seen the
euro slide but what’s interesting is what’s happened more recently, over the
last six months, the euro today is trading pretty much where it was towards
the summer.. the end of the summer in 2018. And over the last three months it’s
still the same. So you can see that the volatility for EUR/USD.. and we’ll
see this in a second, when we look at the charts, has really dried up in recent
months. But let’s look at what caused the slide last year, was this US
dollar strength. So it is lower than it was a year ago and we saw a real
comeback by the dollar against a host of currencies from April 2018. So as
the US dollar strengthened into the summer, the likes of the euro, the pound,
that sort of stuff, slid. Okay, so that was really the big story for EUR/USD,
last year but we also have of course ongoing Brexit discussions that
affects the European economy, as well as the UK economy. So that, I don’t think, has
really helped the euro performance. The fact that, you know, we still really don’t
know what Brexit is going to look like this near to the deadline. And then we have
had, in recent months, a slowdown in the European economy. We’ve seen the Italian
economy go into recession for the third time in a decade and the German economy
narrowly avoiding going into recession. Last quarter growth was zero percent. So
again we are seeing continental European economies slowing down. So that clearly
is hindering the euro. But let’s catch up, let’s look at the chart, look at the
last year and well let’s look at the levels we should be watching from a
medium to longer term view in the months ahead. so here’s our big-picture chart for EUR/USD This chart, I’ve zoomed in up
until the end of April 2018, just to catch that.. that massive recovery we saw
for the euro in 2017. So it came into 2017 trading just above one.. really
one euro was worth one US dollar, vice-versa. So about 1.04 was where the market was. And we saw this great run of this great trend, all the way through 2017. 2017 was
a really bad year for the US dollar. Lots of US dollar weakness saw the euro
getting lifted higher and it traded as high as pretty much 1.25 by February 2018. Went sideways for a bit but then we saw sentiment change. This is when the US
dollar strength comes back in. So we’ve moved along to bring things up to date
and you can see here at the end of April 2018, the euro starts breaking below this
old support around about the 1.22 area and then starts a slide that eventually
sees it trade as low as almost 1.12 by the middle of November of last year. So it was.. it was a big slide. You can see the US dollar strength coming back here.
But then this is why we’ve seen very little change over the last three to six
months for EUR/USD. You can see just since November how low this
volatility is compared to what we had for much of 2018. So it’s been a really
quiet time for EUR/USD but there are some really big levels to watch.
Let’s just zoom in. So the low for 2018 was set in November. So the middle of
November, the market traded almost down to 1.12 and we had seen a recovery, a
reasonable recovery off that level into the beginning of 2019, trading up towards
sort of 1.155 and 1.16. But look what’s happened since then. It’s come
back to it once again, as recently as the middle of February, we’ve seen a retest
of those old lows and that’s really the big level to watch I think, in the weeks
and the months ahead for EUR/USD. It’s 1.12. If we’re gonna see a bounce and
a recovery from anywhere, then we’d expect to see that 1.12 low from
November 2018 continue to hold. So maybe we will see the euro dollar build a base.
At the moment.. at the time of recording, you can see it did go oversold when it
dipped down there in February. So the RSI is backing this up as good support. In
recent days we’ve seen the MACD give a buy signal off this level. So 1.12 is
really an important level, yeah. So what’s going to affect, I think, if we saw maybe
a bit more progress on Brexit discussions, you know, so we all know
maybe what the situation will be after the end of March, you know, that could
help sentiment towards the pound and the euro but for now at least
the euro is really struggling to hold on to any recovery. So that 1.12 level is
really key. Let’s just zoom things out a bit. But on the upside,
you know, we’ve had real barriers in this 1.1552, 1.16 area. So I think that’s the
level we need to clear, to confirm that a recovery is actually underway. Because
you can see since November, there’s been plenty of back-and-forth to this level
1.12, 1.13. But if we haven’t seen a sustainable recovery, so if we can break
out through – at least – through these early January highs just ahead of 1.16 it does
add more weight to the argument that the euro is going to recover.
Let’s take a look at the downside. Clearly no one’s got a crystal ball, we
don’t know, we need to watch these levels but we also need a plan in place if we
did see 1.12 break. Let’s just step things out. If we saw 1.12 break it would put the
euro down to its its lowest values against the dollar since the the early
summer of 2017. And I think then we just have to start looking at more aggressive
targets on the downside. You know maybe below 1.11, maybe back down to these lows
from May 2017 around about the 1.08 mark So this.. this 1.12 line is really, I think,
a significant level to watch. So for now at least we are seeing buyers continue
to come in when EURUSD slips back to here. So for now it’s holding and
we can make the argument about a potential recovery. But maybe more
cautious traders would want to see a rally through 1.155-1.16. If 1.12 breaks it’s a much more
bearish outlook for EUR/USD and we haven’t had an answer to this really,
either way over the last three months. But it seems unlikely
this lack of volatility is going to continue for another three to four
months. I think we will get a break either way. For now 1.12 is holding that’s
the big level to watch. So you can see what a big level 1.12 is, you know, since
November it has stopped any further declines in EUR/USD, but we
haven’t seen anything like a sustainable recovery. It came back to this level just in recent days, so it really is the big one
to watch going forward. While it’s above it, you know, it still continues to act as
support and maybe we can break some of those levels on the upside. I think so
much is unknown at the moment, particularly when it comes to Brexit, you
know, clearly that’s not something that just affects the UK and the pound. It has
implications for the European economy as well. We’ve already seen some of those
major European economies start to slow down, so I fully expect volatility for the eur dollar to start picking up pretty soon. We’ll start wrapping things
up there. As usual, if you have any questions or a different view on the
euro for the year, let’s have the discussions in the comments down below, I do read them all. If you like the video click on the thumbs up, it helps us reach
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we put up new content. But for this look at the euro we will leave things there. So from me David Jones and capital.com good luck with your trading!

5 Comments

  • Rowland Turner

    February 25, 2019

    Seems to be on a very steady weekly drop

    Reply
  • David Rhys Roberts

    February 25, 2019

    Great content. Bullish on euro dollar and cable although very cautious buying the dips. I agree, I think a break above 1.16ish will be a better cause for the long side.

    Currently focusing on the pound to hit 1.15 on the long term after the whole Brexit malaise unless we see a no deal back down to the 1.21ish and see some form of support again.

    Reply
  • Reb MCMG

    March 11, 2019

    this dude keep making sites or something? i seen him on 212 trading

    Reply
  • Capital.com

    March 21, 2019

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  • Etrader - Making Forex Simple

    July 14, 2019

    great vidoes , we also analysis the eurusd and publish forecast – https://www.youtube.com/watch?v=sDgdlCVwOD0

    Reply

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