Bearish pressure continues to weigh on EUR/USD

<p>EUR/USD spent much of the month of February in a relatively tight consolidation just off the new eleven-year low of $1.1100 that was hit in […]</p>

EUR/USD spent much of the month of February in a relatively tight consolidation just off the new eleven-year low of $1.1100 that was hit in late January. On a rebound from that low extreme, early February saw the currency pair hit a high of $1.1533 before retreating and spending the rest of the month essentially range trading.

In the course of February’s trading range, EUR/USD has formed a clear consolidation pattern within a steep, ten-month bearish trend. This downtrend has pushed the currency pair dramatically lower by more than 20% from its long-term high just short of $1.4000 in May of 2014 down to the noted $1.1100 low in late January.

The current consolidation has formed a rough triangle or pennant pattern near the long-term lows. Coupled with EUR/USD’s continuing downside trend pressure, this pattern hints that the currency pair could well have significantly further to fall in the near future.

With continued euro weakness and only a relatively modest respite in US dollar strength as we near the end of February, bearish pressure continues to weigh on the EUR/USD pair.

The month of March should likely see either an extension of the current consolidation pattern or a clear breakdown below the long-term lows. In the event of the former scenario, major upside resistance on any further drift higher within the consolidation stands firmly around the key $1.1650 level. In the latter setup, any sustained breakdown below the noted $1.1100 support level could see a further decline and trend continuation targeting the key 1.0800 objective to the downside.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.