Euro vs US Dollar trades back in the green after a steep sell-off on Tuesday.

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• Euro vs US Dollar trades back in the green after a steep sell-off on Tuesday.
• US recession woes and banking fears were given as the major catalysts for the sell-off.
• The trend remains bullish according to technical analysis, however, with the 1.1075 YTD highs as the next key level on the radar.

The Euro (EUR) trades back above 1.1000 against the US Dollar (USD) during the early European session, on Wednesday. The pair has stabilized after the market turbulence witnessed on Tuesday in which the pair fell over 100 pips on a sudden surge in USD strength. Whilst the general consensus is the move was driven by safe-haven flows due to US recession and banking fears, it’s also possible it was helped by hedge funds racing to cover a massive $10B failed US Treasury bond short.
Despite Tuesday’s sell-off, from a technical perspective the overall trend is still up, with the probabilities favoring longs over shorts.

EUR/USD peaks at 1.1067 and rolls over, dropping over a 100 pips in a day. That said, it has found a floor and recovered, and is currently trading back above 1.1000. Tuesday’s decline was violent but despite that the broader medium-term uptrend remains intact – and will continue to – as long as the 1.0830 lows hold. Overall the odds favor a continuation of the dominant Euro bullish trend.

EUR/USD: Daily Chart

A decisive break above the 1.1075 year-to-date highs would confirm a continuation of the Euro’s uptrend to the next key resistance level at around 1.1190, where the 200-week Simple Moving Average (SMA) is located.

For the sake of clarity, a ‘decisive break’ might be a ‘breakout candle’ – a long green bullish daily candle that extends above the 1.1075 highs and closes near its high, or three smaller bullish green candles in a row that break above the highs.

Alternatively, a break and daily close below the key lower high at 1.0830 could see losses extend down to a confluence of support at 1.0775-1.0800, marking a possible reversal of the dominant trend.

Euro FAQ

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