Chart Overview
The Euro is under significant pressure as the U.S. Dollar strengthens on the back of Donald Trump’s presidential victory. The heightened demand for the dollar has sent the Euro tumbling into a critical support zone at 1.06305. Can the Euro hold this support line, or if further declines are on the horizon. Let’s break it down.
Technical Analysis of the Euro Futures 6E
Support Zone: 1.05230 – 1.06305
The Euro is testing a vital support zone between 1.05230 and 1.06305. This area has consistently provided a floor for price action throughout 2023 and 2024. A breakdown below this support would open the door for a move toward the lower 0.96875 support zone, indicating serious trouble for the Euro.
Dollar Strength – Euro’s Downward Pressure
The Trump victory has invigorated the dollar, causing it to rally sharply. The Euro, as the dollar’s counterpart, has suffered as a result. With rising expectations for hawkish U.S. policy and economic strength under Trump, the Euro faces difficulties in maintaining current levels.
Bullish Case 📈
- Holding the Support Zone: If the 1.06305 level holds, the Euro could see a short-term bounce. This would provide bulls with an opportunity to retest the 1.10265 resistance zone.
- Oversold Bounce Potential: The recent selloff has pushed the Euro into oversold territory, creating a potential for a relief rally in the coming weeks.
Bearish Considerations ⚠️
- Break Below 1.06305: A decisive breakdown below the support zone could trigger a sharp decline, targeting the 0.96875 support zone, which hasn’t been tested since 2022.
- Dollar Momentum: With the dollar gaining strength, continued bearish pressure on the Euro seems likely unless the broader macro environment shifts.
Outlook & Summary
- Short-term (1-2 weeks): The Euro is likely to hover around the 1.06305 support level. A bounce may occur, but bearish sentiment remains dominant due to the strong dollar.
- Medium-term (1-3 months): If the Euro fails to hold, it could lead to a swift move down toward the 0.96875 zone.
- Long-term (3+ months): Sustained dollar strength and economic divergence between the U.S. and Eurozone could keep the Euro under pressure, risking a longer-term bearish trend.
