EUR/USD Slide Continues but EUR Weakness Elsewhere Questionable

By DailyFx | August 21, 2014 AAA

DailyFX.com -

Talking Points:

- EURUSD cracks to fresh yearly lows at 1.3241.

- USDCHF has resumed its move towards 0.9160/89.

- US Dollar strength in August shouldn't surprise - it's a seasonally strong month.

EURUSD and USDCHF are back in tandem, and while that mean a bit more EURUSD weakness as USDCHF tries for $0.9160, that doesn't mean that Euro has to weaken across the board. The trailing quarterly correlation (63 days, average month has 21 trading days) between EURUSD and USDCHF is -0.960; or +0.960 between EUR and CHF.

The EUR and CHF relationship is important to note because even though both currencies are showing a tendency for further losses against the US Dollar, they might not be elsewhere.

EURGBP's potential inverse head & shoulders bottoming pattern looks more valid in context of GBPCHF's head & shoulders topping formation; both point to British Pound weakness relative to the Euro and Swiss Franc.

EURJPY Daily Chart (February 2014 to Present)

EUR/USD Slide Continues but EUR Weakness Elsewhere Questionable

If EURJPY can clear ¥138.05, it will have broken out of 1) an expanding wedge since July 10 and 2) the downtrend encased by the May 13 and June 9 highs. Given the down move since the start of the year, a reasonable target in the short-term would around ¥139.30, where the descending TL from the December 27, 2013 and May 8, 2014 highs intersect at the end of next week.

See the technical video for considerations specifically for EURUSD, USDCHF, EURAUD, and EURGBP.

Read more: USD Breakout Led by EUR/USD, USD/JPY - Bull Flags in USD/CAD, USD/CHF

comments powered by Disqus
Related Forex Analysis
  1. GBP/USD claws to 1.6100 ahead of Europe
    Forex News

    GBP/USD claws to 1.6100 ahead of Europe

  2. EUR/USD glued to 1.2755; triggers are wanted
    Forex News

    EUR/USD glued to 1.2755; triggers are wanted

  3. Asia recap: most majors are still sleeping in a ranges; JPY is weakening
    Forex News

    Asia recap: most majors are still sleeping in a ranges; JPY is weakening

  4. Gold Struggling Below $1250, SPX 500 Trying to Retake 1900 Figure
    Forex News

    Gold Struggling Below $1250, SPX 500 Trying to Retake 1900 Figure

  5. US Dollar Technical Analysis: Stalling at Channel Support
    Forex News

    US Dollar Technical Analysis: Stalling at Channel Support

Trading Center