CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

EUR/USD technical analysis: counter-trend rally may be over already

This month’s rally in EUR/USD from the $1.1704 low touched on 31 March has already run out of steam and the earlier falls in the pair may soon resume.

EUR/USD technical analysis

So far, this month has been good for EUR/USD bulls, with the price climbing steadily from the 31 March low at $1.1704.

However, that looks like simply a rally within a broader trend lower and the rally is already running out of steam, suggesting that the longer-term downward trend may soon resume.

Euro price set to fall back

April has so far been a kind month for EUR/USD bulls, with the price climbing steadily since touching a recent low at $1.1704 on 31 March. However, the last couple of days have seen the pair moving sideways and that suggests the longer-term decline since it hit $1.2243 on 25 February could resume soon.

EUR/USD price chart, daily time frame (7 December 2020 – 8 April 2021)

If there is a decline, the key level to watch out for is that 31 March low and any drop under $1.17 would be a new 2021 low and open the way for further losses, perhaps as far as the $1.1602 low touched on 4 November last year. If this proves wrong, the key level to watch out for on the upside would be the 25 February high mentioned earlier.

Note, incidentally, that from a fundamental perspective the rally can be seen as a bout of profit-taking and short covering by EUR/USD bears that has now finished and that those bears will soon go short of the pair again.

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