With forex brokers and traders all talking about the upcoming French Election, it is an ideal time to take a closer look at EUR/USD.

Starting with the higher time frame, weekly chart, we can see that EUR/USD has depreciated sharply over the last couple of years, with exaggerated moves following Brexit and the Trump election.

The top of the above weekly support zone is just this EUR/USD 4 hourly support that we spoke about on the blog following the Fed's rate hike and subsequent small rip (you can click that highlighted link to go back and view the charts we from the start of March and then carry on to what we see today), but overall EUR/USD has been in overall decline for a very long time:

EUR/USD Weekly:

Drilling in a little further and taking a look at an intraday, 4 hourly chart, we can see that on the way back down toward the support zone, it is now also testing trend line support:

EUR/USD 4 Hourly:

Zoom out on your own MT4 charts and you can clearly see the lows that I used to draw the line. There are obviously a few slight variations that you could use to draw the line, but that's just the subjective nature of trend lines and part of the game.

The trend line is obviously very subjective, so for me it's now all about whether EUR/USD can bite here while it's still above the weekly support zone and ultimately find some short term resistance turned support to kick off of.

There are a few scenarios that we will look to go over on social media, so make sure you send us some screenshots of your charts so we can share them with the forex trading community.

Action Insight Weekly Report

Dollar Surged and Yield Rebounded after a Dramatic Week of Negative News, More Upside ahead

"The market is always right". That's by no means saying that the market is efficient, that's a topic for the academics. But, the market always move with certain underlying forces. We may or may not always understand why stocks, yields, currencies commodities move that way. It doesn't matter. And indeed, the voice of the market is usually the loudest when it does something that doesn't make sense. It's up to us to hear it or ignore it. And, reading news is not about reading the news but the reactions to the news. It's our choice to see the reactions, or just to criticize the reactions.

So coming back to "reality", we've got a very dramatic week, especially towards the end. And news were indeed rather negative to Dollar. US launched military strike in Syria and relationship with Russia tensed up after that. Russia even condemned that US is just "one step away" from war. The highly anticipated summit between US President Donald Trump and Chinese President Xi Jinping ended with "very frank, very candid" discussions. But then? Nothing more. Non-farm payroll grew a mere 98k in March even though unemployment rate dropped to 10 year low.

How did the markets respond? DJIA closed down -0.03% on Friday at -20656.10, and down -7.12 pts only for the week. S&P 500 closed down -0.08% on Friday to 2355.54, down the week by -7.18 pts for the week. 10 year yield dived to as low as 2.271 on Friday but closed the day up 0.030 at 2.373, down -0.023 for the week. Dollar index gained 0.46 on Friday to close at 101.13, up from prior week's 100.56. The resiliences in stocks, rebound in yields and the surge in Dollar were impressive. And these developments argue that, maybe those news were not bad news at all.

One of the explanations could be found in the jump in oil price on geopolitical risks. Energy stocks' rally somewhat offset losses in financial stocks. And technically, WTI crude oil maintained a higher high, higher low pattern and is back above 55 day EMA. It should now be heading back to 55.24 resistance and above to extend the larger up trend. And with that, upside pressure on headline inflation could be revived that would eventually pass through to underlying inflation.

DJIA's rebound attempt failed after hitting 20887.50 last week and retreated. While we expected a deeper decline in the index to extend the fall from 2116.11, it didn't happen. Instead, DJIA is holding well above 55 day EMA. It's far from certain that the pull back from 2116.11 is over. But the odds for testing 2116.11 or 19914.03 fibonacci level look even at this point.

10 year yield breached 2.314 and fell to as low as 2.271. But the single day reversal on Friday now suggests short term bottoming. Focus is back on 55 day EMA at 2.415 this week. And decisive break there will pave the way back to retest 2.615 high.

The rebound in TNX was also accompanied by strong rally in Dollar index. 55 day EMA is firmly taken out. And the development now favors the case that pull back from 103.82 is already completed with three waves down to 98.85. Focus will now be on 102.26 resistance this week and break there could pave the way through 103.82 high to resume the larger up trend.

Overall, with bearish dollar news in the back ground, the bullish development in Dollar and yields suggest that the greenback could be ready for a sustainable rise, at least in near term. We'll closely monitor the developments. But for now, we'll be looking at Dollar long opportunities.

To close AUD/JPY short

Regarding trading strategy (refer to last week's report), we sold AUD/JPY at weekly open at 84.90 last week. The bearish view proved to be correct so far as the cross dived to as low as 82.79 before closing at 83.26. Technically, we still believe that AUD/JPY's rebound from 72.39 has completed at 88.21. And deeper fall would be seen to 38.2% retracement of 72.39 to 88.21 at 82.16 and below. However, considering the possibility of reversal in treasury yield, a rebound in USD/JPY could pull other yen crosses higher. Therefore, we'll just close the AUD/JPY short position at market this week to capture the profits first.

To close EUR/GBP short too

Also, we sold EUR/GBP at 0.8550 (stop at 0.8610) as the cross recovered. The cross engaged in sideway trading most of the week. Technically speaking, we're favoring the case that consolidation pattern from 0.8303 is completed at 0.8786 already. But we cannot ruled out the case of one more rising leg before fall from 0.9304 resumes. Also, we'd anticipate market's focus to return to Dollar strength this week. And, EUR/GBP would possibly just stay sideway, with prospect of a stronger rise. Hence, we'll close the position at market when the week opens and look for opportunity elsewhere.

To sell EUR/USD for 1.0339 and below

Instead, we'll sell EUR/USD at market this week, with a stop at 1.0690, above 1.0688 resistance. 1.0494 support is the first target. But we're actually looking at holding the short position through 1.0339 low if it develops as we expect.

EUR/USD Weekly Outlook

EUR/USD's fall from 1.0905 extended to as low as 1.0580 last week. The development affirmed the case that corrective rise from 1.0339 is finished after being rejected by 55 week EMA. And, the larger down trend is likely ready to resume. Deeper fall is expected in near term and break of 1.0494 support should confirm this bearish case.

Initial bias in EUR/USD remains on the downside this week for 1.0494 support. Break should confirm completion of the corrective rise from 1.0339. And, larger down trend is likely resuming in this case. Break of 1.0339 will confirm down trend resumption and target 100% projection of 1.1298 to 1.0339 from 1.0905 at 0.9946. On the upside, break of 1.0688 resistance will delay the bearish case and turn focus back to 1.0905 resistance instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

In the long term picture, the down trend from 1.6039 (2008 high) is still in progress and there is no clear sign of completion. We'd expect more downside towards 0.8223 (2000 low) as long as 1.1298 resistance holds. However, firm break of 1.1298 should now confirm long term reversal.

EUR/USD's fall from 1.0905 extended to as low as 1.0580 last week. The development affirmed the case that corrective rise from 1.0339 is finished after being rejected by 55 week EMA. And, the larger down trend is likely ready to resume. Deeper fall is expected in near term and break of 1.0494 support should confirm this bearish case.

Initial bias in EUR/USD remains on the downside this week for 1.0494 support. Break should confirm completion of the corrective rise from 1.0339. And, larger down trend is likely resuming in this case. Break of 1.0339 will confirm down trend resumption and target 100% projection of 1.1298 to 1.0339 from 1.0905 at 0.9946. On the upside, break of 1.0688 resistance will delay the bearish case and turn focus back to 1.0905 resistance instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

In the long term picture, the down trend from 1.6039 (2008 high) is still in progress and there is no clear sign of completion. We'd expect more downside towards 0.8223 (2000 low) as long as 1.1298 resistance holds. However, firm break of 1.1298 should now confirm long term reversal.

USD/JPY engaged in range trading in 110.10/112.19 last week and outlook is unchanged. The pair is staying well in side a near term falling channel and well below 55 day EMA (now at 112.52). More downside is mildly in favor. But the pair is also pressing 55 week EMA (now at 111.15). Hence, we'd be cautious on reversal from the current point.

Initial bias in USD/JPY remains neutral this week first. On the downside, break of 110.10 will extend the whole decline from m 118.65 and target 50% retracement of 98.97 to 118.65 at 108.81. On the upside, however, break of 112.19 resistance will indicate short term reversal and turn bias back to the upside for 115.49 resistance.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Nonetheless, sustained trading below 55 week EMA (now at 111.15) will extend the consolidation from 125.85 with another fall through 98.97 before completion.

In the long term picture, the rise from 75.56 long term bottom to 125.85 medium term top is viewed as an impulsive move. Price actions from 125.85 are seen as a corrective move which could still extend. But, up trend from 75.56 is expected to resume at a later stage for above 135.20/147.68 resistance zone.

GBP/USD's sharp fall and break of 1.2376 support last week should confirm completion of rise from 1.2108 at 1.2614. More importantly, the triangle pattern from 1.1946 could be finished with five waves to 1.2614 too. And the larger down trend is resuming. Deeper fall should be seen back to 1.2108 support to confirm this bearish case.

Initial bias in GBP/USD remains on the downside this week for 1.2108 support first. Decisive break there will argue that medium term down trend is resuming. In that case, GBP/USD should take out 1.1946/1986 support zone to 61.8% projection of 1.5016 to 1.1946 from 1.2614 at 1.0717. On the upside, however, break of 1.2505 resistance will invalidate this immediately bearish case. Then, it will turn bias back to the upside for 1.2614 resistance instead.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

In the longer term picture, no change in the view that down trend from 2.1161 is still in progress. Current momentum suggests that the down trend will go deeper than originally expected to 100% projection of 2.1161 to 1.3503 from 1.7190 at 0.9532.

USD/CHF's rebound from 0.9812 extended to as high as 1.0096 last week. The development affirmed the case of near term reversal. That is, correction from 1.0342 has completed with three waves down to 0.9812. Further rise is expected in near term to 1.0169 resistance to confirm this bullish view.

Initial bias in USD/CHF stays on the upside this week for 1.0169 resistance first. Decisive break there will indicate resumption of rise from 0.9548 and should target 1.0342 key resistance next. On the downside, below 1.0023 minor support will turn bias neutral and bring consolidations before staging another rally.

In the bigger picture, we're still maintain that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the cross. However, the corrective nature of the fall from 1.0342 to 0.9812 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

The long term outlook in USD/CHF stays a bit mixed for the moment. But in case of another medium term fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile, firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

AUD/USD's sharp decline last week and downside acceleration is affirming the case of near term reversal. That is rise from 0.7158 is completed at 0.7748 already. Focus will now be on 0.7490 support. Firm break there will confirm this bearish case and target 0.7158 again in near term.

Initial bias in AUD/USD remains on the downside this week for 0.7490 key near term support. Decisive break there will confirm completion of whole rise form 0.7158. In such case, deeper fall would be seen back to 0.7144/58 support zone. On the upside, break of 0.7586 support turned resistance is needed to confirm completion of the fall from 0.7448. Otherwise, outlook will remains cautiously bearish in case of recovery.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8142) and above.

In the longer term picture, while the down trend from 1.1079 might extend lower, we're not anticipating a break of 0.6008 (2008 low) yet. We'll look for bottoming above there to reverse the medium term trend.

Despite jumping to 1.3455 last week, subsequent sharp fall in USD/CAD argues that the corrective fall from 1.3534 is not completed yet. That is, such decline is in favor to extend through 1.3263 before completion. But overall, we're still expect rise from 1.2968, and that from 1.2460 to resume later through 1.3598 at a later stage.

Initial bias in USD/CAD stay son the downside for 1.3263 support. Break will confirm resumption of whole fall from 1.3534. Nonetheless, in that case, we'd expect strong support from 1.3184 cluster level (61.8% retracement of 1.2968 to 1.3534 at 1.3184, 100% projection of 1.3534 to 1.3263 from 1.3455 at 1.3814 too) to contain downside and bring rebound. On the upside, break of 1.3455 will turn bias back to the upside for 1.3534 resistance.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. However, break of 1.2968 will argue that the third leg has already started and should at least bring a retest of 1.2460 low. Meanwhile, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

In the longer term picture, rise from 0.9056 (2007 low) is viewed as a long term up trend. It's taking a breath after hitting 1.4689. But such rise expected to resume later to test 1.6196 down the road.

GB/JPY's choppy fall from 144.77 resumed last week with weak downside momentum. The cross will likely continue to spiral lower in near term. But overall, price actions from 148.42 are corrective in nature. Thus, we'd slight favor the case for medium term rebound from 122.36 to resume in a later stage.

Initial bias in GBP/JPY remains mildly on the downside this week. Current fall from 144.77 would target medium term fibonacci level at 135.39. We'd anticipate strong support from there to bring rebound. On the upside, firm break of 140.08 resistance will now indicate near term reversal and turn bias back to the upside for 142.79 resistance first.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern. Or, sustained break of 50% retracement of 122.36 to 148.42 at 135.39 will turn outlook bearish for a test on 122.36 low. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement of 195.86 to 122.36 at 167.78.

In the longer term picture, while price actions from 122.36 would develop into a medium term correction, fall from 195.86 is still seen as resuming the down trend from 251.09 (2007 high). Hence, after the correction from 122.36 completes we'd expect another fall through 116.83 low.

EUR/JPY's sharp decline and break of 118.23 resistance confirmed resumption of whole fall from 124.08. More importantly, the development argues that whole medium term rebound from 109.20 is completed at 124.08 already. Deep fall is now expected ahead.

Further fall is expected this week as long as 118.78 minor resistance holds. EUR/JPY should now target 61.8% retracement of 109.20 to 124.08 at 114.88 next. On the upside, above 118.78 will indicate short term bottoming and bring rebound back to 119.31/120.43 resistance zone. That also coincides with 55 day EMA (now at 120.19). In that case, we're look at the reactions in this resistance zone to assess the outlook again.

In the bigger picture, the firm break of 38.2% retracement of 109.20 to 124.08 at 118.39 indicates that medium term rise from 109.20 is completed at 124.08. That's well below 126.09 key support turned resistance. Also, EUR/JPY failed to sustain above 55 week EMA. Deeper decline would now be seen back to 109.20 low. Overall, the down trend from 149.76 (2014 high) is not completed yet. Break of 109.20 will resume such down trend towards 94.11 low. In any case, break of 126.09 is needed needed to confirm medium term reversal.

In the long term picture, medium term decline from 149.76 is seen as part of a long term sideway pattern from 88.96. Decisive break of 126.09 will indicate that such decline is completed and EUR/JPY has started another medium term rally already. Before that, deeper fall is mildly in favor towards 94.11 low. Overall, long term range trading will continue.