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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