Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

EUR/USD technical analysis: euro rally into Fibonacci resistance

Both the ECB and FOMC helped to serve EUR/USD bulls but the pair is now testing a big zone of Fibonacci resistance – can buyers break through?

EUR/USD talking points:

  • EUR/USD had a strong final nine months of 2020 trade, but first quarter (Q1) saw a bearish reversal of that move
  • The final day of Q1 produced a low on EUR/USD and bulls have been pushing-higher ever since

The EUR/USD rally has come back to life. After a strong showing in the final nine months of 2020 trade, EUR/USD bulls took a rest in Q1 as prices pulled back before finding support at a long-term Fibonacci level. That price helped to cauterize support as buyers showed up around the Q2 open, and the pair has shown consistent and strong momentum-higher ever since.

Find out more about forex trading

EUR/USD rally runs into confluent Fibonacci resistance

The past two weeks have brought rate decisions out of both Europe and the United States, and each seemed to serve this trend in a similar way, helping bulls to continue the climb. But prices have just run into a zone of resistance that may be able to provide pause for the move.

This zone runs from 1.2134-1.2167, and each of those prices are 50% markers from major moves spanning 2000-2008 and 2014-2017. And this area of prices has had a pull on price action recently, as well, as this helped to set resistance in December before bulls posed a breakout, after which it became support in early-January and, then again as resistance in February.

EUR/USD higher-low support potential

Given the momentum of the recent trend combined with that big zone of resistance coming back into play, and EUR/USD may soon present pullback potential. The bigger question will be just how aggressively bulls may react as USD-weakness continues to drive some very strong themes through global markets.

Taking a look at the four-hour chart below, and the big spot of possible support that just sticks out runs from 1.1965-1.2000. But, before that comes into play is a Fibonacci level from the same study that produced the price that helped to set the Q1 low, and that shows at 1.2033. A hold here would denote anticipation from buyers unwilling to wait for a 1.2000 re-test. There’s another level that’s even closer to current price action which could similarly display that anticipation, and that’s from a group of prior swing-highs and lows that plots around 1.2060. Similarly, a hold here would highlight a sense of aggressiveness from buyers that would keep the potential for topside trend continuation as an attractive theme to work with.

This information has been prepared by IG, a trading name of IG Markets 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. See full non-independent research disclaimer and quarterly summary.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market.

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

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.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets 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 spread betting and CFDs.

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