EUR/USD Weekly Technical Analysis 13 March 2017 - A Bear Market Rally for the Euro

EUR/USD spot: 1.0707

Support: 1.0624, 1.0494, 1.0345

Resistance: 1.0720, 1.0771, 1.0825

Strategy:

• Longer term: Sell rallies when a bearish reversal pattern forms on one or four hour charts. Look to take some profits at 1.0494 and 1.0345, while keeping a small position for a bigger move.
• Short term: While the pair remains above 1.0624, traders can buy retracements within the bull channel and take profits at the top of the channel.

Buy the Rumour, Sell the Fact

As expected, US Non-Farm payroll data supported the case for a rate hike by the Fed. However, it appears the positive data was priced in to the extent that the only thing to do was take profits, or to focus on the ECB statement from Thursday.

The ECB statement was cautiously optimistic, but probably not enough to change the market’s overall view. Sentiment is still shifting to bearish for the Euro at higher levels, and while the Euro did break higher, it lost momentum short of the first target at 1.0720.

This week will see PPI and CPI data released in the US, but all eyes will be on the Fed. While the interest rate decision is taken as a given, the market will be listening carefully to the commentary that goes with it. Traders will also be watching the election campaign in France. Marine Le Pen, who was seen as a risk for Europe, seems to be losing support. If that situation changes, it will be another negative factor for the Euro.

The Euro is Rallying into Resistance

On the longer-term charts, the Euro is rallying up to the top of the channel, though it is very difficult to see exactly where that is. The Euro may rally as high as 1.0825, or the 30-week moving average at 1.077 may offer resistance as it did in February.

EUR/USD Weekly chart

Is that the End of the Rally?

On the four-hour chart, the Euro has clearly broken out of the range it has been stuck in since 19 February. As expected this was a sharp break, but it struggled to reach the target at 1.0720. If the move reverses, we should see a retest of the breakout level at 1.0620. The reaction at that level should give us a good indication of the direction for the week.

EUR/USD 4-Hour Chart