Euro Forecast: EUR/USD Completes Cup-and-Handle Formation

Euro Outlook: EUR/USD

The recent rally in EUR/USD seems to have stalled as it no longer carves a series of higher highs and lows, but the exchange rate may further retrace the decline from the 2024 high (1.1214) as it completes a cup-and-handle formation.

Euro Forecast: EUR/USD Completes Cup-and-Handle Formation

EUR/USD falls from a fresh yearly high (1.1147) to pull the Relative Strength Index (RSI) back from overbought territory, and the exchange rate may face a further decline if struggles to defend the advance from the monthly low (1.0778).

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Nevertheless, EUR/USD may track the positive slope in the 50-Day SMA (1.0626) as it holds above the moving average, and the weakness in the exchange rate may turn out to be temporary as it clears the October high (1.1144).

With that said, EUR/USD may attempt to test the 2024 high (1.1214) as a cup-and-handle formation seems to be unfolding, but the exchange rate may negate the reversal pattern should it fail to hold within the opening range for April.

EUR/USD Chart – Daily

Chart Prepared by David Song, Senior Strategist; EUR/USD on TradingView

• EUR/USD snaps the recent series of higher highs and lows after struggling to close above the 1.1070 (23.6% Fibonacci retracement) to 1.1090 (38.2% Fibonacci extension) zone, and failure to hold above the 1.0940 (50% Fibonacci retracement) to 1.0960 (23.6% Fibonacci extension) region may push the exchange rate may towards the 1.0870 23.6% Fibonacci extension) to 1.0880 (23.6% Fibonacci extension) area.
• Next area of interest comes in around the monthly low (1.0778), but a cup-and-handle formation may unfold as it appears to be defending the 1.0940 (50% Fibonacci retracement) to 1.0960 (23.6% Fibonacci extension) region.
• Need a move/close above 1.1070 (23.6% Fibonacci retracement) to 1.1090 (38.2% Fibonacci extension) zone to bring 1.1170 (50% Fibonacci retracement) on the radar, with the next area of interest coming in around 1.1260 (61.8% Fibonacci extension) to 1.1280 (61.8% Fibonacci retracement).

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--- Written by David Song, Senior Strategist

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