Euro vs US Dollar pulls back from highs just short of 1.11 to trade in the mid-10s on Thursday, ahead of US GDP data.

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• Euro vs US Dollar pulls back from highs just short of 1.11 to trade in the mid-10s on Thursday, ahead of US GDP data.
• US recession and banking crisis fears provided the backdrop, amidst reports of First Republic Bank teetering again.
• The trend remains bullish according to technical analysis with the 200-day SMA at circa 1.1190 as the next target.

The Euro (EUR) trades comfortably in the mid 1.10s against the US Dollar (USD) during the early European session, on Thursday. The pair has stabilized after recent volatility, caused by renewed recession fears and banking crisis deja vu in the US. From a technical standpoint, the overall trend is up and the probabilities favor long holders.

EUR/USD reached a new 2023 high of 1.1095 and has rolled over to trade in the mid 1.10s, at the time of writing. The broader medium-term uptrend, however, 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: 4-hour Chart

On the 4-hour chart, EUR/USD looks like it may be forming a triangle pattern, with Wednesday’s highs representing a false breakout. If so, the triangle looks like it may have formed four distinct waves, labeled A-D on the chart above. Since triangles are usually composed of five waves it may be close to completing, with only wave E remaining before completion.

Triangles can breakout in either direction but, given the dominant trend is bullish, the odds partially favor a breakout higher. As such, a decisive break above the 1.1095 year-to-date highs would confirm such a bullish breakout from the triangle, and 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. If the triangle fulfills its full price potential, however, the Euro-US Dollar could even reach 1.1229.

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 1.0909 lows would signify a bearish breakout from the triangle, with a target at 1.0805, which in itself could suggest a possible reversal of the dominant trend.

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