Macquarie sees EUR/USD reaching 1.21-1.23 range

Macquarie analysis indicates the EUR/USD pair has broken a major long-term downtrend from its 2007 peak, signaling a significant upward shift and projecting a potential move to the 1.21-1.23 range. The current rally has already driven a 17% increase, hitting Macquarie's 1.1825 target, with the market now in a 1.14-1.18 congestion phase that is easing overbought conditions. A complete reversal of this major uptrend would only occur if the US Dollar Index closes at least 1% below its 0.9600 support level.

Analysis

According to analysis from Macquarie, the EUR/USD currency pair has breached a significant long-term downtrend line originating from its 2007 peak, signaling a structural shift toward a new upward trend. The firm projects the pair has the potential to reach the 1.21-1.23 range. This outlook is supported by the current rally, which has already produced a 17% appreciation and reached Macquarie's initial target of 1.1825. The market is now in a consolidation phase, trading within a 1.14-1.18 range, which is serving to alleviate overbought conditions on momentum indicators. This consolidation is viewed as a precursor to the next upward move, which is expected to commence once momentum indicators retreat to the zero line. The bullish thesis would only be invalidated by a major bearish reversal, which Macquarie defines as a close in the US Dollar Index at least 1% below its critical support level of 0.9600.

Key Decisions for Investors

• Investors with a bullish view on the Euro could consider the current 1.14-1.18 consolidation as a healthy pause, potentially presenting opportunities to add to long EUR/USD positions ahead of a potential move toward the 1.21-1.23 target range.
• It is prudent to monitor for a pullback in momentum indicators to the zero line, as Macquarie suggests this could signal the end of the consolidation phase and the start of the next leg of the uptrend.
• For risk management, a close in the US Dollar Index (DXY) at least 1% below the 0.9600 support level should be treated as a key signal to re-evaluate or hedge long EUR exposure, as this would invalidate the current bullish technical setup.