EUR/USD

EUR/USD has had a bumpy ride so far this year with the most actively traded fx-pair starting the year just off a six-month high before sliding to a multi-week low in mid-February. Since then the pair have pushed higher, making a clear ascending channel, before starting to turn lower again. And as we head into the second quarter of the year, EUR/USD is trading around a technically important area, which for now looks likely that it will lead the pair lower. EUR/USD has closed, and more importantly opened, below the recent trend support level and is now siting just above all three simple-moving averages and the 23.6% Fibonacci retracement of the late-September 2022 to mid-July 2023 rally. A break below 1.0787 opens the way to further losses down to the mid-February low just under 1.0700. Below here, the October 2022 low at 1.0450 becomes the next target. Any move higher in EUR/USD will likely be due to changes in the US dollar and market expectations of their upcoming rate cut cycle. Any move higher in EUR/USD will find initial resistance around 1.0980. If this is broken with conviction, a cluster of prior resistance levels between 1.1095 and 1.1139 will prove difficult to break.

EUR/USD Daily Price Chart

EUR/GBP

EUR/GBP is another pair that has been trading in a defined range over most of the first quarter. Support around 0.8500 has held firm and promoted a sharp rebound during its two tests, while the 0.8550 area has seen a variety of highs and lows printed on either side. As we write, multi-month resistance is being broken due to a current bout of Sterling weakness, and the 200-day SMA at 0.8606 and a prior set of highs around 0.8620 is set to come under pressure soon. In the short term, a move above 0.8620 may well happen but with the CCI indicator showing the market in extremely overbought territory, a period of consolidation is likely. While the path of least resistance remains pointed higher, a move substantially higher - above 0.8700 - will struggle for traction. EUR/GBP looks set to trade higher in Q2, but not noticeably.

EUR/GBP Daily Price Chart

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EUR/JPY

EUR/JPY has trended higher since the start of 2024 despite expectations that the European Central Bank will cut rates and that the Bank of Japan will raise interest rates. Indeed, the EUR/JPY ascending channel has been in place since May 2020 when the pair traded around 115, compared to a current spot price of 164. From a fundamental angle, EUR/JPY should start to turn lower in the second quarter as the yield differential between the two currencies narrows. However, from a technical point of view, the pair may move higher still. The weekly chart shows that the ascending channel remains in place and the pair trade above all three simple moving averages. The CCI indicator suggests EUR/JPY is starting to become overbought but is not yet close to the extreme levels seen in November last year. EUR/JPY will likely range trade in the coming weeks before either fundamentals or technicals take over and direct the next move.

EUR/JPY Weekly Price Chart

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