CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Euro technical outlook - EUR/USD breaks lower while EUR/JPY threatens a similar move

The Euro has gone south as the US dollar soared across the board in the last few sessions and EUR/JPY struggles to find support.

EUR/USD technical analysis

EUR/USD snapped downward as it traded at its lowest level since December 2002.

A previous Double Bottom was ignored in the move as bearish momentum appears to have accelerated.

All short, medium and long term Simple Moving Averages (SMA) are displaying negative gradients and are in sequential order of shortest to longest tenor from the price. This indicator became apparent on 29th June.

After breaking below three prior lows in the 1.0340 – 1.0360 area, this may now become a resistance zone. Further up, there is potential resitance at the 10-, 21- and 55-day SMAs. The latter coincides with a descending trendline, currently dissecting at 1.0566.

Support may lie at the recent low of 1.0235 or the 1.618% Fibonacci Extension at 1.0079.

EUR/USD volatility

Not surprisingly, the price has broken below the lower band of the 21-day simple moving average (SMA) based Bollinger Band. A close back inside the band might be an indication of a pause in bearishness.

The width of the bands have expanded slightly on increasing historical volatility that the Bollinger Bands measure.

Market priced forward looking volatility has picked up markedly. The benchmark one-month at the month (ATM) volatility price is at its highest level since the Russian invasion of Ukraine, trading at 10.93%.

It spent all of 2021 in a 4.5 – 7.5% range. This might suggest further uncertainty in EUR/USD lies ahead.

EUR/JPY technical analysis

EUR/JPY failed to break above the seven-year high of 144.25 resistance on several occasions, before falling down through an ascending trendline.

It is currently threatening to break below a second ascending trendline, but the descent has paused at the 55-day simple moving average (SMA), currently at 138.84. There is also an historical break point nearby at 139.02

A clean break below these three potential support levels could suggest further bearishness may unfold. The ten-day SMA looks likely to cross below the 21-day SMA and this would form a Golden Cross, that may indicate that bearish momentum is evolving.

Support may lie at the previous low of 137.84 or at the break point of 134.30.

On the topside, resistance might be offered at 141.41 or the high of 144.25.

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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