Major bull/bear battle could be brewing for EUR/USD

EUR/USD bulls continue to power multi-session advances with technicals supporting a bullish outlook for the euro and a possible breakout of recent trading range. Trump/Powell meeting surprises markets.

The US dollar was lower against all major pairs in midday New York trading, with euro bulls pushing strongly toward a test of major resistance levels.

President Trump held an unscheduled meeting with US Federal Reserve chairman Jerome Powell Monday morning, which surprised markets. The US dollar weakened as traders suspected that Trump used the meeting to put pressure on Powell to ease monetary policy more aggressively. The president has been calling publicly on Powell to lower interest rates for many months.

Critical test

The $1.12 EUR/USD level remains the critical test, and if the euro can push past that level it will mean a breakout of the range of $1.10 to $1.12 that EUR/USD has been trading in since early October.

While US dollar bulls have offered scant resistance to the euro’s climb in recent sessions, they may be saving their ammunition for a defense of levels around $1.12, suggesting that a major battle between euro bulls and bears may be in store for later this week.

EUR/USD traded as high as $1.1090 Monday in North America and was settling in near 100-day support of $1.1070 in late trading.

Growing consensus

There is a growing consensus that fundamentals are shifting somewhat in the euro’s favor. Economists are seeing a possible bottoming out of the downturn in euro area growth this year. Recent news showed that Germany, the euro area’s largest economy, avoided falling into recession in the third quarter, though by the narrowest of margins.

A great deal of media attention was paid Monday to a bullish euro forecast by US investment bank Morgan Stanley, which says going long EUR/USD will be one of the best macro trades over the next year.

Morgan Stanley sees economic growth differentials between the euro area and the US narrowing in coming quarters, which will favor the euro.

The investment bank also expects that moves by the US Federal Reserve to add funds to US money markets, which is being done to avoid a repeat of a grave market squeeze that occurred in September, will result in a glut of US dollar liquidity that will benefit the euro starting early next year.

Elliott Wave turning big-time euro bullish

Analysts that have expertise in the Elliott Wave branch of technical analysis have been turning increasingly euro bullish in the latest quarter, and most are pointing out now that the early November weakness in EUR/USD is likely temporary and not a reversal of the strong euro bull move throughout most of October.

Elliott Wave analysts are generally looking for a euro push past $1.12, reinforcing the view that this week may be pivotal for EUR/USD. Forecasts differ somewhat but suggest that when resistance around $1.12 is breached in a meaning full way that the area around $1.18 may be the next stop.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.