It is no easy task to analyse the latest price swings on the EUR/USD because of the high volatility and erratic reactions to numerous news stories and rumours that continue to hit the markets, say technical analysts at Digital Look.

"The EUR/USD is currently trading at the 61.8% Fibonacci retracement of a previous rally, a major support level," they explained.

"However, it is possible that yesterday's intraday high (1.3318) was only a simple pull-back to the former short-term bullish trend line that began in early November."

If the currency pair is truly executing the latter scenario, analysts said that it's possible that the decline in the euro will only steepen and wipe out that entire bullish rally.

"This would take the EUR/USD to around 1.2650 - 1.2700."



Not so alarming on the weekly chart

The weekly price charts help provide a better picture when the day-to-day price action triggers erratic signals. The high volatility of recent weeks has been creating mixed signals that give analysts a hard time to decipher.

"In spite the recent declines, the underlying trend remains bullish as is evident by the bigger picture reflected on the weekly chart.

"On this longer-term chart, the EUR/USD is trading near support at 1.30, which coincides with the neckline of January's formation. As such, a correction towards 1.29-1.2930 can still be considered a double throwback."

The chart also shows that the currency pair continues to build higher lows and higher highs, allowing the bulls to remain calm.

"Even though the fast move to 1.30 catches the market by surprise, there is no major reason to be alarmed."





JR

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