Can the Euro’s Movement Be Considered a Wedge Pattern?

EUR/USD, Time frame: Daily, Tools: SMA50

By tracking the attached chart, we can see that the euro against the US dollar has a positive opportunity to continue its upward trajectory through a falling wedge pattern. Of course, certain technical conditions must be met for this pattern to succeed, the most important of which is a breakout above the resistance area near 1.1630. This level also represents resistance from the 50-session moving average. A break above 1.1630 could push the euro toward a historical resistance level near 1.2100, which the euro has attempted to break above on three previous occasions.

The euro is currently attempting to post a positive performance for the fourth consecutive week. If successful, this would be the first time the euro has risen for four consecutive weeks since April of last year. So far, the euro has gained approximately 2% over these weeks, with further gains possible if the positive performance continues through a break above the 1.1630 resistance level.

The euro could benefit from a decline in the US dollar following data showing a slowdown in the US labor market, easing inflationary pressures, and a decline in retail sales. This has been interpreted as a sign that the Federal Reserve may move toward changing its monetary policy to support the economy and the labor market. At the time of writing, the euro is trading near 1.1575, while the outlook could turn less positive if it breaks below the support level near 1.1510.

The key question remains: Which path will the euro choose in the coming period? Will it break above 1.1630 or below the 1.1510 support level? Let’s watch closely.