Euro Falling; Long-term Look at EUR/USD, EUR/JPY, EUR/GBP

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Euro Falling; Long-term Look at EUR/USD, EUR/JPY, EUR/GBP

The euro fell sharply during the 9/30 European session. Ahead of the ECB meeting this Thursday, traders are apparently pricing in a dovish decision. We know the ECB has QE on the table, but the market is trading like it is going to be implemented, which would not be surprising given the low growth and inflation data in 2014. Let’s take a look at the EUR/USD, EUR/JPY, and EUR/GBP long-term charts.

EUR/USD Weekly Chart 9/30
eurusd weekly chart 9/30

(click to enlarge)

From the weekly chart, we can see that EUR/USD has been bearish since 1.3993 high from May this year. The decline has been sharp and has blown by certain support pivots, like the 2013-low at 1.2745 and the Nov. 2012 low at 1.2660. The next possible support is the 1.2442-1.2460 area, which involves a previous resistance pivot in August 2012, and the 78.6% retracement level.

EUR/JPY Weekly Chart 9/30
eurjpy weekly chart 9/30

(click to enlarge)

The EUR/JPY is actually in a bullish trend in the weekly chart. However, 2014 has been a year of consolidation. The Japanese Yen has been in a bearish mode since the start of BoJ’s quantitative/qualitative easing (QQE) campaign. However, as noted before, the euro in 2014 has been bearish due to dovish expectations for the ECB.

Now, September price action has cracked the consolidation pattern resistance, but there has not been a bullish continuation yet. There is a pullback in the last couple of weeks. If price can hold above 138.00, the bullish outlook would still be alive, especially with the rising trendline support from 2012 still in pay. Below 137.50 however, EUR/JPY is likely still in consolidation, with downside risk toward this year’s low of 135.81.

EUR/GBP Weekly Chart 9/30
eurgbp weekly chart 9/30

(click to enlarge)

EUR/GBP has been bearish since 2013, when it retreated from a high of 0.8815. This week, price is testing the 2012 low of 0.7764. There is another support pivot (and Oct. 2010 low at 0.7693. With the strong bearish momentum, EUR/GBP looks poised to break these support pivots and into lows not seen since 2008.

The weekly chart going back to 2009 shows that the bearish mode has been with EUR/GBP since 2009 from a high of 0.9798. With the weekly RSI nearing oversold territory, the 0.77 area might provide at least some short-term support.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.