EUR/USD at 7-Week Loss as EUR/JPY Shows Signs of Reversing

Euro Weekly Forecast: Bearish

• EUR confirmed a seven-week losing streak against USD
• intention EUR/USD Confirm breakout at 200-day moving average
• euro/yen Could be on the brink of a bearish breakout

The euro is on a seven-week losing streak against the US dollar after falling -0.63% on Friday. This means the EUR/USD is on its longest losing streak since 2014. It would take nine weeks of losses to match their longest losing streak since 1997.

Friday’s close marked the lowest since mid-June and opened the door to an extension of the downtrend since July. Moreover, the price also closed below the 200-day moving average once again, opening the door to an increasingly bearish technical bias.

A confirming breakout of 1.0766 reveals the May low of 1.0635. Otherwise, there is significant resistance at 1.0956, the midpoint of the Fibonacci retracement, which could lead to a move up.

EUR/USD daily chart

Charts created with TradingView

On the other hand, the euro may be poised for a turnaround against the Japanese yen. Since June, EUR/JPY has continued to rise within a rising wedge chart formation. Not only did the price collapse under the wedge, but a bearish entrapment formed when this happened. A further downside confirmation could open the door to a reversal.

Near-term support is at the 50-day moving average, which could re-focus the broader upside. Otherwise, a liquidation on the downside would provide even more bearish confidence on the technical side. This will focus on the Fibonacci retracement levels 155.20 and 153.47 of 14.6% and 23.6% respectively. Otherwise, a higher extension exposes the midpoint of the Fibonacci extension at 161, followed by the 61.8% level at 163.26.

EUR/JPY daily chart

Charts created with TradingView

— By Daniel Dubrowski, Senior Strategist, DailyFX.com