EUR/USD Outlook for Feb 18

The EUR/USD could not not get above 1.3800 after making attempts earlier this week.  There is a resistance band running above 1.3800 and it was said in previous posts that not being able to climb above that point is bearish for the EUR.  On Wednesday the EUR fell apart, falling close to 200 pips after not being able to penetrate that level and then breaking short-term support.

From here we have two potential scenarios:  The recent lows are broken and we continue the downtrend. Or the lows hold and we are in a trading range (current).

Support comes in at 1.3580.  A break below is likely to test 1.3560 and lows near 1.3530.  If the lows are broken next major target is 1.3400.  If this develops, some support is also likely at 1.3500 and 1.3440-1.3430.

On the upside, there is resistance up to 1.3640.  A rise above is likely to continue to push higher.  1.3700-1.3730 comes in as resistance, followed by 1.3760 and 1.3800.  Movement into this area establishes a ranging environment.  Movement above 1.3840 indicates a further move  higher.  A move below 1.3530 indicates further downside action.  Until those points are taken out, I am treating this as a range.

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Cory Mitchell, CMT

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