EUR/USD Pierces Trendline, Outlook Now ‘Very’ Bullish
EUR/USD overcame selling pressure in the 1.0800 zone and successfully pierced above a key trendline capping the range highs, signifying a bullish breakout, which has increased the likelihood of an extension higher.
We have noted in recent reports how several major institutions suggested EUR/USD would struggle to overcome the 1.0800 and 1.0829 levels, however, it has now pierced well above 1.0800 and is nearing 1.0829.
It has also significantly broken through the trendline drawn joining the previous two highs in late 2016 and February 2017, which we feel is more important level than either 1.0800 or 1.0829.
With Eurozone political risk quickly draining away as Le Pen falters there is probably more potential upside potential remaining before the French trade fully unwinds.
Continued lack of clarity on Trump’s infrastructure plans which seem over-the-top given US budgetary constraints may keep the Dollar in check, whilst the DXY chart also looks like it has further to fall.
Société Générale are now saying they expect “the capitulation of another round of Euro shorts” and market technicians at Singapore lender OUB are bullish, expecting an eventual move up to 1.0875, the 2016 December highs, with only a break below 1.0670 changing their POV.
We see a possible throwback move occurring in the very short-term as the exchange rate pauses for breath and air-kisses the trendline goodbye, however, once that is out of the way it should run higher to the 200-day MA at 1.0890.
