After a rally from $1.045 to a high of $1.1140 from October to December 2023, the EUR/USD exchange rate has now executed a bearish flag formation, which resulted in an acceleration of the decline (strength for USD). As a result, the currency pair has now also broken below trendline support, adding to and confirming the bearish outlook for the next few weeks.
Based on the flag formation, a price target between $1.0650 and $1.0700 can be calculated. That area coincides with the horizontal (green-shaded) support area that has offered support and resistance over the last 8-9 months.
Upside potential for EUR/USD is now limited, as the former support line and the lowest point of the flag are expected to start acting as resistance overhead.