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Euro Price Outlook: EUR/USD Breakout Levels Well-Defined Post-Fed

Euro Price Outlook: EUR/USD Breakout Levels Well-Defined Post-Fed

2019-06-20 17:25:00
Michael Boutros, Technical Strategist
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Euro has rallied more than 0.75% against the US Dollar since the start of the week with the post-FOMC breakout now targeting initial resistance targets. These are the updated targets and invalidation levels that matter on the EUR/USD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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Euro Price Chart - EUR/USD Daily

EUR/USD Price Chart - Euro vs US Dollar Daily - Technical Outlook

Technical Outlook: In my latest Euro Price Outlook we noted that the near-term advance in EUR/USD was vulnerable below pitchfork resistance with, “broader key support steady at the yearly low-day close / 61.8% retracement at 1.1182/86.” Price registered a low at 1.1181 this week before rebounding sharply on the back of yesterday’s FOMC interest rate decision with the advance now testing basic channel resistance extending off the late-January high (red).

A topside breach here targets subsequent resistance objectives at the monthly high at 1.1348 and the 61.8% retracement of the yearly range at 1.1393. Key support steady at 1.1182/87 with a break / close below the monthly open / opening-range lows at 1.1160/65 needed to shift the broader focus lower.

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Euro Price Chart - EUR/USD 120min

Euro Price Chart - EUR/USD 120min - Euro vs US Dollar Technical Outlook

Notes: A closer look at price action shows Euro breaching the descending pitchfork formation extending off the monthly highs with the advance failing today just ahead of near-term resistance at 1.1317. Interim support at 1.1264 backed by 1.1232 and the weekly open at 1208– looking for downside exhaustion at one of these two level IF price is indeed heading higher. Topside Euro levels unchanged at 1.1348, “1.1374 and 1.1393- a breach there is needed to fuel the next leg higher with such a scenario targeting the 2019 yearly open at 1.1445 (look for a bigger reaction there IF reached).”

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Bottom line: Euro is trading just below slope resistance at 1.1317- looking for a reaction up here. From a trading standpoint, a good spot to reduce long-exposure / raise protective stops. Ultimately, looking for a pullback to offer more favorable entries while above the weekly open- targeting a topside breach. Review my last Euro Weekly Price Outlook for a longer-term technical picture on EUR/USD.

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

EUR/USD Trader Sentiment

EUR/USD Trader Sentiment - Euro vs US Dollar Price Chart
  • A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -1.11 (47.4% of traders are long) – neutral reading
  • Long positions are 21.3% lower than yesterday and 5.0% lower from last week
  • Short positions are 4.8% higher than yesterday and 14.9% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Euro prices may continue to rise. Traders are further net-short than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias from a sentiment standpoint.

See how shifts in EUR/USD retail positioning are impacting trend- Learn more about sentiment!

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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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

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