$1.15, a technical target that was expected
Since the beginning of the year, the euro dollar has established itself as the leader of the foreign exchange market (Forex). Up by more than 10%, it has outperformed all other major Forex pairs, and this upward movement has been built up in stages from a technical analysis point of view. The major chart target of $1.15 has now been reached, a pivotal technical threshold that dates back to 2020/2021.
Since the start of the year, there have been a series of bullish reversal signals on the EUR/USD rate, with a break of resistance at $1.06 in early March, a bullish reversal pattern reminiscent of autumn 2022, and a recently validated golden cross. Elliott wave analysis suggested an end to wave 2 in February, which was validated by price action and momentum indicators.
The $1.15 mark had been the technical target since the $1.06 mark was breached, and the market could now breathe a sigh of relief below this resistance.
Below is a chart showing the performance of the major Forex pairs since the beginning of the year.
Institutional traders were again the forerunners
But what gives even more weight to this move is the behavior of institutional traders. As is often the case, they were the first to sense the bullish reversal. The COT report published by the CFTC shows that, from the beginning of March, hedge funds swung into the long camp, with their net positions returning to positive territory. Shortly afterwards, asset managers followed suit, and the entire institutional net position went bullish by over 50%, historically a major bullish signal (see the second chart below).
Now the real question is: are they still buying at these levels? Do they strengthen? If they start to lighten up, it'll be a game-changer. But for now, support is there, even if the euro-dollar rate were to pause or retrace below $1.15 resistance in the short term.
Support at $1.10/$1.12 is the guarantor of the uptrend.
Below, chart showing weekly Japanese candlesticks for the EUR/USD rate, with the institutional positioning curve according to the CFTC's COT report
So, can we aim for $1.20 by the end of 2025?
From a purely technical point of view, it's not impossible, but we'd need to break above $1.15/$1.17 to activate such a target. And fundamentally, it won't happen by itself. A combination of factors is needed: a euro buoyed by German economic momentum, the end of the conflict in Ukraine, an accommodating but credible ECB, and above all, a weakened US dollar, which requires a healthy “FED put”, in other words, a FED that eases because disinflation is confirmed, and not under the constraint of a recession. We also need to keep a close eye on interest-rate spreads: a spread too favorable to the dollar would break the momentum. In short, $1.20 is technically conceivable between now and the end of the year, but conditional on a macroeconomic context that is not yet present.
DISCLAIMER:
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions.
This content is not intended to manipulate the market or encourage any specific financial behavior.
Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results.
Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content.
The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services.
Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA.
Products and services of Swissquote are only intended for those permitted to receive them under local law.
All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade.
Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties.
The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.
Since the beginning of the year, the euro dollar has established itself as the leader of the foreign exchange market (Forex). Up by more than 10%, it has outperformed all other major Forex pairs, and this upward movement has been built up in stages from a technical analysis point of view. The major chart target of $1.15 has now been reached, a pivotal technical threshold that dates back to 2020/2021.
Since the start of the year, there have been a series of bullish reversal signals on the EUR/USD rate, with a break of resistance at $1.06 in early March, a bullish reversal pattern reminiscent of autumn 2022, and a recently validated golden cross. Elliott wave analysis suggested an end to wave 2 in February, which was validated by price action and momentum indicators.
The $1.15 mark had been the technical target since the $1.06 mark was breached, and the market could now breathe a sigh of relief below this resistance.
Below is a chart showing the performance of the major Forex pairs since the beginning of the year.
Institutional traders were again the forerunners
But what gives even more weight to this move is the behavior of institutional traders. As is often the case, they were the first to sense the bullish reversal. The COT report published by the CFTC shows that, from the beginning of March, hedge funds swung into the long camp, with their net positions returning to positive territory. Shortly afterwards, asset managers followed suit, and the entire institutional net position went bullish by over 50%, historically a major bullish signal (see the second chart below).
Now the real question is: are they still buying at these levels? Do they strengthen? If they start to lighten up, it'll be a game-changer. But for now, support is there, even if the euro-dollar rate were to pause or retrace below $1.15 resistance in the short term.
Support at $1.10/$1.12 is the guarantor of the uptrend.
Below, chart showing weekly Japanese candlesticks for the EUR/USD rate, with the institutional positioning curve according to the CFTC's COT report
So, can we aim for $1.20 by the end of 2025?
From a purely technical point of view, it's not impossible, but we'd need to break above $1.15/$1.17 to activate such a target. And fundamentally, it won't happen by itself. A combination of factors is needed: a euro buoyed by German economic momentum, the end of the conflict in Ukraine, an accommodating but credible ECB, and above all, a weakened US dollar, which requires a healthy “FED put”, in other words, a FED that eases because disinflation is confirmed, and not under the constraint of a recession. We also need to keep a close eye on interest-rate spreads: a spread too favorable to the dollar would break the momentum. In short, $1.20 is technically conceivable between now and the end of the year, but conditional on a macroeconomic context that is not yet present.
DISCLAIMER:
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions.
This content is not intended to manipulate the market or encourage any specific financial behavior.
Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results.
Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content.
The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services.
Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA.
Products and services of Swissquote are only intended for those permitted to receive them under local law.
All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade.
Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties.
The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.
This content is written by Vincent Ganne for Swissquote.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
This content is written by Vincent Ganne for Swissquote.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.