Forex Update: Euro Looking Strong Against Other Currencies

2017 was a year to remember for the Euro. It surged against major currencies including the British Pound, Japanese Yen, and Canadian Dollar. The “Fiber” was up by as much as 9.14% against the Cable, 11.62% against the Yen, and 6.7% against the Loonie. One of the reasons is because in 2017, the European Union grew at its fastest pace in a decade.

While the Euro is off to a slow start in 2018, we expect its dominance against the above mentioned currencies to continue. In this article, we reveal how the Euro is looking strong against other currencies.

Euro/British Pound Analysis

From a short-term perspective, it may seem that the British Pound is in a freefall against the Euro due to a potential no deal Brexit scenario. The lack of clarity and possible deadline extension from October this year to March 2019 has caused many GBP investors to be jittery.

However, a look at the monthly chart of the Euro/British Pound (EUR/GBP) pair and you will see that the rise of the Euro and the fall of the Pound is just beginning.

 

Monthly chart of EUR/GBP

The market is on the verge of breaching resistance of 0.90 and triggering the large inverse head and shoulders pattern on the monthly chart. What’s more exciting is that the EUR/GBP pair has the potential to go parabolic just like it did between September 2007 and December 2008.

We can see that the monthly RSI respects support of 56. This tells us that the market is extremely bullish. A breakout from the inverse head and shoulders pattern should attract a lot more bullish momentum and potentially spark a parabolic run.

Euro/Japanese Yen Analysis

The Euro/Japanese Yen (EUR/JPY) pair is off to a rocky 2018. The market is down by 3.26% year-to-date. This is happening in spite of the Japanese government’s policy to pursue a weaker Yen.

The monthly chart of the EUR/JPY might shed more light on this issue.

Monthly chart of EUR/JPY

As you can see, the market is consolidating inside a large symmetrical triangle on the monthly chart. Currently, it is in the midst of the E-wave which is often the last drop before the pattern breakout. This means that the Euro might show more weakness in the near future before it can resume its uptrend. Nevertheless, the Euro’s short-term woes against the Yen is nothing but a hiccup if you look at the bigger picture.

Euro/Canadian Dollar Analysis

The Euro/Canadian Dollar (EUR/CAD) pair has been in an uptrend since June 2013 when it breached resistance of 1.35. This triggered the inverse head and shoulders pattern on the weekly chart. For over two and half years, the Euro enjoyed significant growth against the Canadian Dollar. However, the pair hit a massive resistance at 1.60 in January 2016. That resistance is still a major hurdle more than two years later.

Monthly chart of EUR/CAD

Bears have defended the resistance of 1.60 from two consecutive bullish rallies. However, long-term investors don’t need to worry because it is very likely that the third time’s the charm.

Currently, EUR/CAD is at the tail end of the ascending triangle on the monthly chart. Should the market print another higher low as projected, bulls are very likely to overrun bears at 1.60. That should signal the start of what can be a long and strong bull run.  

Bottom Line

The Euro is off to a slow 2018 but long-term investors need not worry. It appears the this currency is gearing up for massive breakouts. It seems as if it is preparing to resume the uptrend against the British Pound, Japanese Yen, and Canadian Dollar.

Featured image courtesy of Shutterstock. 

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.