The pair did a swing low to 1.6779 on March 5th and then a swing high to 1.9799 on March 19th. It is currently on a retrace and posted a low of 1.7672 so far.
Big swings are in play on the FX front since central banks started lining up with the “whatever it takes” mantra and slashing interest rates.
The euro initially found extraordinary safe-haven status. Investors either bought euros or liquidated earlier shorts acquired prior to the volatility hitting the FX markets.
The 8-hr chart above outlines the current retrace lower in progress. Ideally, this retrace should follow through all the way down to 1.700 handle; and it just might.
However, at present, we are only interested in the current scenario we are seeing developing on the pair.
The red trendlines are forming a descending wedge. If broken, the target is the blue trendline or mid 82.XX.
In a rare case, if there is a break under the descending wedge, a move towards the black trendline or 1.7000 handle would look attractive.
Overall, as stated, a fuller correction lower could get a test of 1.7000 and then a likely swing back higher.
Once again, the current layout prefers a break higher of the descending wedge and tests mid 82.XX.
A failure to close higher to the blue trendline would suggest a minor correction is over and we are back to retracing lower, possibly making a run all the way to the 1.7000 handle.
The 2-hr chart is almost identical to the 8-hr chart layout. The only minor difference it carries is the dotted line in between.
This line represents a base support the pair likely has set in from the very current price action. It could potentially provide the earlier swing to break higher than the wedge.