EUR/USD may soon break the 12-year trendline

The pair slightly contracted after reaching the highest level since 2018. What’s next?

What happened?

The euro has shown the great performance during 2020 so far. It seems it has changed the 2-year downward long-term trend. If we look at the weekly chart below, we will notice it.

The Euro gained on the current risk-on sentiment and the weak US dollar. Also, EU members agreed on the 750-billion-euros recovery fund to support economies in Europe. This fund includes 360 billion euros in loans and 390 billion euros in grants that don’t need to be repaid. Moreover, today the German consumer climate gave an additional impetus to the further EUR’s rally. It came out 0.8%, that was twice better than analysts expected. Some analysts claimed that the euro is overbought, but it keeps rallying no matter what.

Technical tips

If we look at the weekly EUR/USD chart, we’ll see that the pair is really close to break the intersection of the 12-year trendline and the 50.0% Fibonacci retracement level at 1.1600. If it crosses it, it will surge to the 61.8% Fibo level at 1.1820.

Now let’s look at the 4-hour chart. EUR/USD reached the key psychological mark at 1.1600, but then slightly contracted. If it breaks it through again, the price may jump to the high of September 9, 2018 at 1.1625. On the flip slide, the move below the support at 1.1570 will form the bearish double-top pattern and push EUR/USD even lower to 1.1525. Follow the US unemployment claims report at 15:30 MT time. It will add some fresh volatility to the pair!

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Kseniya Medik