After months of swinging sideways compared to the US dollar, the European single currency managed to sprint past the extremely important resistance zone from the multi-year high at USD 1.1918 and the 200-month line (currently at USD 1.1950) the day before yesterday. Thanks to this liberation, we discussed the scenario of a “major breakout” here yesterday. The analysis of the daily chart further supports this thesis, so that different time levels go “hand in hand”. The price development since June last year can be interpreted as an upward sliding zone between just under USD 1.14 and USD 1.1850 (see chart). The follow-up potential – derived from the height of the trend-confirming price pattern – can be estimated at 4.5 US cents. The resulting price target of USD 1.23 harmonizes perfectly with the initial target of bottoming out completed last year. So two different formations and two different time frames suggest a further rise in the EUR compared to the Greenback. In the short term, the breakout zone at just over USD 1.18 serves as a technically sensible hedge.
EUR/USD (Daily)
Source: LSEG, tradesignal² / 5-year chart attached
5-year chart EUR/USD
Source: LSEG, tradesignal²
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