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Euro Technical Forecast: EUR/USD Crashes into Support at 20 year Lows

Euro Technical Forecast: EUR/USD Crashes into Support at 20 year Lows

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Euro Technical Price Outlook: EUR/USD Weekly Trade Levels

  • Euro updated technical trade levels & sentiment – Weekly Chart
  • EUR/USD plunges into technical support at multi-decade lows- inflection risk into October open
  • Weekly support 9548/95 (key), 9332, 9121; Resistance ~9830s, 99, 1.0000 (key)

Euro is off more than 1% against the US Dollar since the start of the week with EUR/USD now testing technical downtrend support ahead of the monthly close. The battle lines are drawn heading into the October open as we look for possible price inflection down here to offer guidance in the days ahead. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Euro technical setup and more.

Euro Price Chart – EUR/USD Weekly

Chart Prepared by Michael Boutros, Technical Strategist; EUR/USD on Tradingview

Notes: In my last Euro Weekly Price Forecast we noted that the EUR/USD was testing support at the 99-handle into the open of September. We highlighted that a plunge lower would be, “technically damaging for Euro and the break of downtrend support would threaten a bout of accelerated losses towards the 1989 low / 2001 high at 9548-9595- look for a larger reaction in price there IF reached.” Euro rallied into yearly channel resistance early in the month before reversing sharply lower with price plunging into this key support pivot this week- risk for possible price inflection here.

A break / weekly close below this threshold exposes the September 2002 highs at 9332 backed by the 88.6% Fibonacci retracement of the 2000 advance at 9121. Initial weekly resistance now eye at former slope support (currently ~9830s) backed by the 99-handle. Medium-term bearish invalidation now lowered to channel resistance, which converges on parity over the next few weeks- a breach / close above this threshold would be needed to suggest a more significant reversal is underway.

EUR Forecast
EUR Forecast
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Bottom line: Euro is testing confluent support at 9548/95 into the close of the month / quarter – respect the weekly close. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be limited by parity IF price is heading lower on this stretch with a close below needed to fuel the next leg of the downtrend. Keep in mind we have key US inflation data on tap Friday into the close of the quarter- stay nimble here. I’ll publish an updated Euro Short-term Price Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Euro Trader Sentiment – EUR/USD Price Chart

  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +2.93 (74.52% of traders are long) – typically a bearish reading
  • Long positions are 3.05% higher than yesterday and 1.67% higher from last week
  • Short positions are 1.26% higher than yesterday and 18.03% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bearish contrarian trading bias from a sentiment standpoint.

{{SENTIMENT|EURUSD|Learn how shifts in Euro retail positioning impact trend}}


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Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.