It has been a hard for the euro to recover since Brexit, falling down to 1.03, a level not seen since 2002. Economic growth since then has struggled to recover every day that passes, as traders see more complexities in a Post-Brexit world.
Although this scenario is kind of weak and we could still think the euro will keep a bearish trend, technical analysis differs from it. Since Macron Presidential Election, the euro has seen a bright future raising from the darkness.
Yesterday, the EUR/USD touched its highest level this year at 1.1388, and still sees an uptrend. My forecast is positive to euro and that it will keep rising and here’s the reason.
We see that Euro Stoxx 50 have had a bull rally since past July, MACD, RSI & Stochastic indicators have been over zero line since then, 50 MA & 100 MA have crossed to a bullish signal since January 2017 and have positioned below the price since then. These indicate that the European economy is nice and active.
On a daily chart, EUR/USD appears to show a trend change with Head & Shoulders pattern, since September 20016, and 9 months later achieved a pattern neckline. 50 MA & 100 MA are both below current price and 50 MA crossed the 100 MA on March indicating a bullish trend. We would need to wait price to considerably break neckline in order to confirm a bullish trend.
A possible correction is seen on a daily chart as Stochastic has a double top, and RSI is about to enter the overbought zone. Correction patterns haven’t been so aggressive lately so I wouldn’t worry about it.
According to Fibonacci retracement, our first target price would be 1.17, if it’s reached and passed we can confirm a bullish trend and next target would be 1.215 followed by 1.258. Honestly at this stage I don’t think it would raise more than this, however time and economy will tell if the euro will receive its strength back.