**EUR/USD Price Forecast: Trendline Breakout Looms Above 1.1700**
*Based on the original article by Anil Panchal, FXStreet*
The EUR/USD pair is currently trading near the pivotal resistance level of 1.1700, with market participants closely watching for a potential bullish breakout. The euro has shown signs of a recovery against the US dollar after enduring considerable pressure in recent months. The technical and fundamental factors suggest that the currency pair is on the verge of a significant trend change, possibly establishing a new bullish phase if certain resistance levels are broken convincingly.
This comprehensive analysis delves into the current market structure, key technical indicators, fundamental influences, and possible trading strategies related to the EUR/USD pair.
## Current Market Overview
– The EUR/USD is attempting to build upon short-term bullish momentum, trading just below the resistance at 1.1700, which has acted as a psychological barrier in recent sessions.
– A descending trendline, drawn from the highs recorded in previous months, is now being tested, indicating a potential breakout scenario.
– The price action suggests cautious optimism, where buyers are making repeated attempts to push the pair higher.
– The US dollar has lost some of its recent strength, partially due to softer economic data, which is aiding EUR recovery.
## Technical Analysis: Key Price Levels and Chart Patterns
### Resistance Levels:
1. **1.1700** – This round number serves as immediate resistance and coincides with the descending trendline from previous peaks.
2. **1.1750** – Should the pair close above 1.1700, this level becomes the next significant barrier.
3. **1.1800** – A break above 1.1750 opens the path toward this psychological threshold, last seen during stronger euro periods.
### Support Levels:
1. **1.1650** – Closest support level that may offer buying interest if a pullback occurs.
2. **1.1600** – A psychological support acting as a line in the sand between bullish and bearish sentiment.
3. **1.1575** – August’s swing low that marks a critical zone for any downside continuation.
### Moving Averages:
– The EUR/USD is trading around its 50-day moving average (1.1685), which is flattening out, suggesting a potential momentum shift.
– The 100-day moving average lies near 1.1760, which coincides with the next upside target.
– The 200-day moving average sits further below, near 1.1600, indicating a longer-term bearish bias remains unless broken convincingly to the upside.
### Additional Chart Observations:
– A bullish breakout appears imminent, as the pair tests the upper boundary of a downward-sloping trend channel.
– A series of higher lows on the daily chart provides a bullish structure, indicating increased buyer interest at lower levels.
– RSI (Relative Strength Index) currently hovers close to 60, reflecting bullish momentum without being overbought.
– MACD (Moving Average Convergence Divergence) lines are trending higher and nearing a bullish cross, further confirming positive momentum.
## Fundamental Factors Supporting Bullish Outlook
Several macroeconomic factors provide support for a stronger euro if the current momentum continues.
### Euro Area Developments:
– Recent data from the Eurozone has shown signs of stabilization, particularly in German industrial output and business sentiment indicators.
– Inflation pressures continue to remain low, but the European Central Bank (ECB) has indicated limited room for further rate cuts, indirectly supporting the currency.
– Political stability within the bloc remains largely uneventful, removing any volatility-based risk premium from the euro at this time.
### United States Outlook:
– The US dollar has weakened recently on account of disappointing retail sales and jobless claims data, raising concerns about the strength of the economic recovery.
– Federal Reserve members remain cautious about tapering asset purchases too quickly, with mixed messaging keeping the dollar under pressure.
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