Forex Update: Euro Recovering Against Major Currencies
2018 was a year to forget for the Euro. For almost the entire year, it corrected against major currencies such as the US Dollar and the Japanese Yen. While it performed well against the New Zealand Dollar, it significantly pulled back in Q4 of 2018.
Nevertheless, the Euro looks to start the year with a bang as it begins to show signs of strength. In this article, we show how the Euro is recovering against major currencies.
Euro/US Dollar (EUR/USD)
The EUR/USD pair is telling us that it wants to climb higher.
While it corrected after touching a high of 1.25543 in February 2018, it is now giving us bullish technical action. The pair successfully flipped resistance of 1.14 into support in August 2018. Even though the market went below the support in November, bulls managed to recover it in December. This told us that the price action was a bear trap.
EURUSD 1W chart
With the recovery of the support, EUR/USD broke out of the falling wedge on the weekly chart. The breakout marks the end of the correction and the possible resumption of the uptrend against the dollar. If you plan to long the market, the target to look for after entering the market is 1.25.
Euro/Japanese Yen (EUR/JPY)
The EUR/JPY pair is showing that it wants to reverse its trend.
The market has been correcting after posting a 2018 high of 137.492 in February 2018. However, the corrective period might be coming to an end as EUR/JPY is currently printing a large hammer on the monthly chart. The long wick below the monthly candle’s body tells us that market participants are strongly rejecting lower prices.
EURJPY 1M chart
Another reason why the recovery is likely on the horizon for the pair is that it appears to be forming a second higher low. Also, the market seems to be respecting the 100 MA on the monthly chart. With these technical signals, it is likely that EUR/JPY will revisit 137.50 in the coming months.
A move above 137.50 will likely result in a strong bull run.
Euro/New Zealand Dollar (EUR/NZD)
The EUR/NZD pair is a market that wants to end its consolidation.
A look at the weekly chart shows that EUR/NZD has been trading sideways for over seven years. It is locked in a range between 1.50 and 1.80. However, recent price action shows that it might be ready for a range breakout.
Although the EUR/NZD retraced after generating a 2018 high of 1.79295 in October, it managed to respect the range midpoint of 1.65. The bounce was also supported by the 100 MA on the weekly chart.
EURNZD 1W chart
Currently, it is facing some resistance against the 50 MA. This might be an opportunity for you to buy the dip. As long as the market is above the range midpoint of 1.65, the likelihood of revisiting 1.80 and even breaking out of range is high.
After a brutal 2018, it appears that the Euro wants to flex its muscles in 2019. It is showing strong reversal signals against the US Dollar and the Japanese Yen. In addition, it looks primed to break out of a seven-year range against the New Zealand Dollar. 2019 may be the year that Euro recovers against these three major currencies.
Featured image courtesy of Shutterstock.