Euro targets six-year high against US dollar

  • EUR/USD has strengthened by 7.5% in the past 12 months
  • But it is not all down to dollar weakness – the euro index is up 9.7% over the same period
  • Our machine-learning model forecasts a further increase of 7.6% for EUR/USD over the next year
Euro targets six-year high against US dollar

EUR/USD support and resistance levels

Machine-learning forecast

The current price of the euro is 1.2191 US dollars. We forecast a move to 1.3120 over the next 12 months, which represents a further strengthening of 7.6%. This will take prices above the significant 2018 high of 1.2556, reaching levels not seen since late 2014.

Euro strength

The euro index is up 9.7% in the past 12 months and the dollar index is down 6.8%. This implies that the strengthening of the euro contributed 30% to the increase in EUR/USD and the broad weakening of the dollar contributed 70%.

Dollar index vs Euro index

Technical analysis

The bull channel encompassing prices from 2015 to the present is the most prominent pattern at play, with the top of the channel projecting to c1.3000 over the next 12 months.

The bull leg up from 2020 has begun to transition into a smaller expanding channel pattern, which alerts traders to the possibility of increased volatility as well as helping to guide prices higher.

The 2018 high of 1.2556 will become a magnet for prices, with the reaction upon the breaking of it likely to set the tone going forward. The bottom of the small expanding channel is a key area of support for any future downside retracements.

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This report is independent investment research as contemplated by COBS 12.2 of the FCA Handbook and is a research recommendation under COBS 12.4 of the FCA Handbook. Where it is not technically a res...

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