EURUSD has been sideways since climbing above 1.0580 on December 13th.
When I last wrote about the euro, I mentioned that a 4-hour close below that area could trigger a short opportunity.
However, EURUSD bulls have remained resilient so far.
But the US Dollar Index (DXY) chart mentioned in yesterday’s blog post has even better technicals.
While the EURUSD has been sideways and difficult to read, DXY has formed a near-perfect symmetrical triangle.
Given that the euro makes up 57.6% of the DXY weighting, a move from DXY will push EURUSD out of its comfort zone.
Keep in mind that DXY and EURUSD move inversely to one another since the US dollar is the quote currency.
As mentioned yesterday, the future direction for DXY hinges on a break from either 104 support or 104.50 resistance.
Both areas are holding for now.
As for the EURUSD, a close below that 1.0580 area would signal weakness and expose 1.0462.
Alternatively, a break and hold above 1.0680 would open up 1.0787 and potentially higher.
Lastly, keep in mind that trading conditions will remain thin between now and the new year, making choppy price action and false breaks more likely.
