EURUSD Forecast: Testing Support in Trump Rally Pause

Article By: ,  Market Analyst

Key Events

  • The Trump rally pushed markets to overbought levels, signaling potential for a recharge or reversal by the end of 2025
  • EURUSD risks sliding to 1.03 and 1.01 if a breakout occurs below 1.0480
  • US Retail Sales could add DXY volatility ahead of the weekly close
  • Eurozone and US Flash PMIs may drive volatility risks on EURUSD next week

Following this week’s positive CPI results and the ongoing Trump rally, the DXY reached a critical resistance level at 107, forming a potential bull flag pattern and pulling EURUSD down to retest one-year lows at 1.05. Market pullbacks on Friday were observed across Bitcoin, precious metals, the US Dollar Index, and EURUSD, with retail sales data adding volatility risk.

While the DXY traced a bull flag pattern this week, the EURUSD traced a bear flag pattern

DXY – EURUSD Weekly Time Frames – Log Scale

Source: Tradingview

The extreme target of the pattern has not yet been reached, as trends are holding at critical support and resistance levels that could fuel a sharp rally if momentum continues. Next week’s key catalyst for the EURUSD chart will be the PMI results.

Currently, Flash Manufacturing PMIs remain relatively weak, staying below the expansion threshold of 50, while Flash Services PMIs are strong, holding above the 50-expansion mark.

Technical Analysis: Quantifying Uncertainties

EURUSD Forecast: Weekly Time Frame – Log Scale

Source: Tradingview

Before extending the drop to the bear flag target, EURUSD’s breakout is currently rebounding from the mid-channel zone aligned with the 1.05 support level, situated within a one-year duplicated channel pattern.

Here’s how the scenarios may play out:

Bearish Scenario: A decisive close below 1.05 could drive EURUSD further down to 1.0380 and 1.0150

Bullish Scenario: If EURUSD rebounds, resistance may be encountered at the trendline connecting the lows of 2023 and 2024, the upper boundary of the duplicated channel, near 1.07 and 1.0770. A strong move above these levels could confirm a longer-term bullish trend for the Euro

--- Written by Razan Hilal, CMT on X: @Rh_waves

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

© City Index 2024