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EUR/USD at Resistance, Breakout Soon? |
There is significant chatter and debate in the forex, and general economic community about the near and mid-term direction of the US Dollar against the major currencies. Economic uncertainty in the US, and the recent slide in equities led to a short-term rally on the USD. As explained in a recent article, the US Dollar remains as the only "Safe Haven" currency for investors to buy in a stormy economic sea. 
But very recent movement has caused investors to wonder about the chances of a continued run-up on the dollar. And while equities have staged a psychologically powerful two-day rally, the EUR/USD is approaching the close of a consolidation zone which may give us insight into its direction.
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The chart below shows a clear down-trend on the EUR/USD, and while there has been a recent move to the upside, it is well in line with expected technical movements.
While the down-trending channel is clear, the pair has shown resilience at an up-trending support level in play since October.
(Be sure to read Charting with Support and Resistance or Technical Patterns to become familiar with these charting and technical analysis concepts.)
So we're left to watch two things:
1. Will the EUR break out of the down-trending channel and push toward 1.30, or will it find resistance where it has four times since the first of the year?
2. If we do see a bounce at resistance in the next day or so, will the EUR/USD continue to find resistance at the uptrending support level at around 1.25, then consolidate toward convergence, or will it push through and see support fall all the way down to the 1.20 level?
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