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Weekly Technical Perspective on the Euro (EUR/USD)

Weekly Technical Perspective on the Euro (EUR/USD)

Michael Boutros, Strategist

In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Here are the key levels that matter on the weekly chart for the Euro vs US Dollar (EUR/USD) ahead of the FOMC & ECB interest rate decisions. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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EUR/USD Weekly Price Chart

EUR/USD Price Chart - Weekly Timeframe

Notes: Euro reversed off basic trendline support extending off the 2017 lows late-last month with the pair rallying more than 2.3% ahead of key interest rate decisions over the next two days. The first major resistance hurdle is eyed at 1.1916/25 where the January low converges on the 38.2% retracement of the yearly range and the 52-week moving average. Ultimately a breach above yearly open resistance at 1.2005 would be needed to mark resumption of the broader uptrend. Confluence support rests at 1.1606with the next key level of significance down at 1.1448.

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

Bottom line: The potential for a larger recovery remains while above the 1.16-handle. From a trading standpoint, I’m looking higher for now with an advance towards yearly open resistance to offer more favorable short-entries. Keep in mind that central bank rate decisions over the next few days are likely to fuel increased volatility in the EUR & USD crosses- watch the weekly close.

EUR/USD IG Client Positioning

EUR/USD Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD- the ratio stands at +1.05 (51.3% of traders are long) – weak bearish reading
  • Traders have remained net-long since Apr 30th; price has moved 3.3% lower since then
  • Long positions are 1.3% lower than yesterday and 17.5% lower from last week
  • Short positions are 9.1% higher than yesterday and 8.4% higher 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. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current EUR/USD price trend may soon reverse higher despite the fact traders remain net-long.

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Previous Weekly Technical Perspectives

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

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com

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

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