EUR/USD: Multi-month consolidation still in play - Westpac

Tim Riddell, Resarch Analyst at Westpac, is assessing the price structures in the EUR/USD for 1Q 2017.

• DAILY
  • 1.05 held in early March, avoided a downdraft, and has allowed for an early push into the central band of EUR/USD’s broad range (effectively 1.04-1.16)
  • Daily momentum is now in extended areas but remains supportive (no divergence or turns). A push to 1.0980 (medium term 50%) may develop before EUR retraces
• WEEKLY
  • Danger of an early downside-range-flip was negated by the close above 1.0650. Rebounds into mid-range may be solid but are not considered to be impulsive
  • Weekly momentum is currently supportive, but bias is for EUR/USD to struggle to progress through the centre of its broad range
• MONTHLY
  • EUR/USD continues to consolidate within a horizontal triangle/pennant. Such patterns normally precede a final leg lower to complete a long term trend
  • Monthly momentum is neutral. Risk of an early base should not be ignored, but a downside range flip is still favoured before a base can develop