Technical Update - EURUSD downtrend potential to 1.0660, medium-term lower. Dollar Index eyeing 107

Technical Update - EURUSD downtrend potential to 1.0660, medium-term lower. Dollar Index eyeing 107

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

  • EURUSD after being rejected at key resistance downtrend has resumed with downside potential to 1.0660 short-term. Medium-term potential to around 1.05

     

  • The Dollar Index's recent close above 104.84, coupled with a supportive RSI, signals a continuing uptrend with potential to around 1.07

EURUSD experienced a rejection at the 0.618 Fibonacci retracement level at 1.0883, which was followed by a massive sell-off triggered by the latest US CPI numbers.
The strength indicator RSI has been reflecting negative sentiment since mid-March, hinting that the recent bullish movement was likely a corrective phase rather than a trend reversal (as disccussed in previous Technical Updates)

Currently, EURUSD is testing the 2nd April lows at 1.0723. There might be a brief rebound, but the overall expectation is that selling pressure will resume. A break below 1.0720 could lead to a further sell-off towards the 1.382 Fibonacci projection and support at 1.0660. To counter this bearish outlook, a close above 1.0885 is required.

Medium-term Outlook:
Should EURUSD close this week at or below its current levels, it would confirm a bearish breakout from the triangle-like pattern observed on the weekly chart.
Applying Fibonacci projections from the October 2023 lows to the December 2023 highs, the 0.618 retracement at current levels is crucial. The next key level would be the 0.786 retracement at 1.0596, nearing the October 2023 low at 1.0448.

This level aligns closely with the 0.382 Fibonacci extension of the triangle's top to bottom at 1.0475 (red Fibonacci lines and the vertical arrows)
A break below the October 2023 lows at 1.0448 could precipitate a sell-off towards the 0.618 extension at 1.0280, marking a significant downward movement

eurusd d 1104
Source all charts and data: Saxo Group
eurusd w 1104

The Dollar Index has exhibited bullish momentum, closing above 104.84 and reinforcing an uptrend that commenced around a week ago.

The RSI's movement above the 60 threshold confirms this bullish trend, suggesting strength in the upward movement.

Short-term, the Dollar Index is anticipated to progress towards the 1.764 Fibonacci projection and resistance around 105.75. A trend reversal would necessitate a close below 103.65.

Medium-term Outlook:
Looking ahead, the Dollar Index has the potential to reach the October 2023 highs at around 107.05. This bullish scenario hinges on the weekly RSI closing above the 60 threshold, which would indicate positive sentiment.
Resistance is expected near the 0.786 Fibonacci retracement level at 105.61.

Conversely, a weekly close below 102.30 would invalidate the medium-term bullish trend, signaling a reversal with downside potential to 100.32

dollar d 1104
dollar w 1104

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.