Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

EUR/USD builds range, $1.20 resistance holds bulls at bay

EUR/USD had a big summer, gaining as much as 11.5%. But so far $1.20 has been a brick wall of resistance that bulls haven’t been able to overcome.

EUR/USD technical outlook:

  • EUR/USD gained as much as 11.5% from the May lows up to the September high.
  • Since failing to break through the $1.20 level in early September, EUR/USD has built into a range-bound formation with support showing in the $1.17-$1.175 area on the chart.

EUR/USD from $1.20 resistance, into a range

It was a surprisingly strong summer for the euro as the currency gained as much as 11.5% against the dollar from the May lows up to the September highs.

The fact that this took place as the continent of Europe continued to slug through a global pandemic along with some weak growth numbers is perhaps even more impressive. On the first day of September, EUR/USD touched the $1.20 level for the first time since April 2018; and that resistance inflection has since put that bullish trend on pause.

For the first half (H1) of September, that bullish trend in EUR/USD has continued to digest. This has even taken on tonality of a range-bound market, with support holding multiple tests in the $1.175 area as resistance has held around psychological levels at either $1.19, $1.195 and of course, the big figure at $1.20. Inflections at or around these levels can even be spanned back as far as late July

EUR/USD four-hour price chart

EUR/USD: IGCS retail sentiment majority bearish – keeping door open for topside

Incorporating sentiment into the matter adds a bit of clarity as retail traders remain net short in the EUR/USD pair with a little over 60% of traders in the IG client sentiment (IGCS) sample with net-bearish positions. We generally take a contrarian view to crowd sentiment, so potential may remain for continued topside, particularly for traders looking to approach this near-term range with a prior trend-side bias. This can keep focus on support for the time being.

Reversal potential

Also applicable in the IGCS study is a recent shift to a lessened net-short position, highlighting the possibility of reversal as retail traders grow less and less bearish on the pair; and given the current technical backdrop, the recent range can help to mark the battle lines for such a scenario.

A breach below the $1.17-$1.175 area can begin to open the door to possible reversal themes in the pair, and given the historical impact of the $1.15 level, this could be an operative area to follow for that next spot of big picture support if a reversal does begin to show.

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

Start trading forex today

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

  • Spreads start at just 0.8 pips on EUR/USD
  • Analyze market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on the most popular forex markets


Prices above are subject to our website terms and agreements. Prices are indicative only

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 forex provider.

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