Euro, EUR/USD, US Dollar, EUR/JPY, Japanese Yen, Head and Shoulders - Talking points

  • EUR/USD ascending trend is being inspected but remains unscathed to date
  • EUR/JPY has made historic highs but might be setting up a technical reversal
  • If the bullish run forEUR/USD ends, will that push EUR/JPY lower?
Euro Technical Outlook – Test of Trends and Potential Reversals for EUR/USD and EUR/JPY?

Recommended by Daniel McCarthy

How to Trade EUR/USD


EUR/USD remains within a long-term ascending trend channel from the September 2022 low and is examining a shorter-term ascending trend line today. A definitive break below it may open the way for a test of the longer-term trend line.

Looking closely at the price action this week, EUR/USD closed below the 21-day Simple Moving Average (SMA) based Bollinger Band last Friday. Yesterday it closed on the lower band. A close back inside the band may signal a pause in bearishness or a possible reversal.

The low this week has been 1.0843 which was seen on Monday. It is above a previous low at 1.0831 and this may continue to provide support. Below there, an April low of 1.0788 currently coincides with the ascending trend line and might lend support.

Further down, there could be support at the prior lows of 1.0713, 1.0525, 1.0516, 1.0483 and 1.0443. The 200- and 260-day SMA currently dissects the latter and may add support.

On the topside, resistance could be at the previous peaks in the 1.1075 – 1.1095 area ahead of the March 2022 high of 1.1185.

Chart Created in TradingView


EUR/JPY made a 15-year high at the start of this month at 151.61 and has since retreated. This price action has seen a potential Head and Shoulders formation evolve.

A Head and Shoulders chart pattern has the potential to be a significant reversal signal. A clean break below the neckline may confirm the emergence of bearishness.

It should be noted though that past performance is not indicative of future results. The neckline is currently near 146.00 but it has a negative gradient and will nudge lower over time. A move above the recent high of 149.27 might call into question the validity of the reversal signal.

Resistance could be at the prior peaks of 146.27 and 151.61 as well as the breakpoint in between at 149.79.

On the downside, support may lie at the breakpoints of 145.67 and 145.57, which are just below the neckline.

How to Trade EUR/USD Recommended by Daniel McCarthy How to Trade USD/JPY

Chart Created in TradingView

--- Written by Daniel McCarthy, Strategist for

To contact Daniel, use the comments section below or@DanMcCathyFX on Twitter


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