EURUSD Drives Deeper into Support as Euro Weakness Remains post-FOMC

EURUSD, US DOLLAR, USDJPY, EURJPY TALKING POINTS:

- The end of Q1 is nearing and US Dollar strength has come roaring back following the FOMC-fueled breakdown to support. That support came-in around the bullish trend-line projection from the ascending triangle formation, keeping the door open for bullish scenarios around the US currency as the door opens into Q2.

- Euro weakness is showing along with that US Dollar strength, begging the question as to whether EURUSD may carry break-down potential into Q2. The pair has been stuck in a range for most of Q4 and the entirety of Q1, 2019, even as the ECB announced a fresh round of TLTRO’s. Euro-weakness and Dollar-strength themes appear inextricably linked at this point, and this will remain a theme of interest into the second quarter.

- DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

US DOLLAR BULLS BACK IN THE FRAY AHEAD OF Q1 END

After last week’s sell-off in the US Dollar, in which the currency found support on the bullish trendline on the bottom of an ascending triangle pattern, US Dollar bulls have come back to the party to push the currency back-above the 97.00 level. This marks a stark contrast to the prior two-week trend, in which the US Dollar found resistance at the top of that formation around the ECB rate decision, followed by a show of consistent weakness until the currency ran into that support.

But over the past week, buyers have returned, prices have pushed higher, and with the end of Q1 bearing down, the prospect of another resistance test looks more likely.

US DOLLAR HOURLY PRICE CHART

As discussed in last week’s webinar, the ascending triangle formation will often be approached in a bullish manner, looking for the motivation that’s driven buyers in at higher-lows to, eventually, to run through horizontal resistance. This keeps focus on bullish potential around the currency as the page turns into Q2, and as most developed Central Banks around-the-world are fomenting some form of dovish policy; enough so that the Fed’s step back from rate hike pledges earlier this month has been unable to produce a lasting impact in the currency.

Will the Fed go even more dovish in Q2? If they don’t, the topside breakout potential around the US Dollar can remain as a very, very interesting theme over the next few months.

US DOLLAR DAILY PRICE CHART

EURUSD STAGING RE-TEST OF SUPPORT ZONE: CAN BEARS BREAK 

THROUGH THIS TIME?

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