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Euro Price Outlook: EUR/USD Surges Towards Fibonacci Resistance

Euro Price Outlook: EUR/USD Surges Towards Fibonacci Resistance

Michael Boutros, Strategist

Euro has rallied more than 0.58% against the US Dollar since the Asia open with EUR/USD charging higher after rebounding off critical support last week. While the medium-term focus has shifted to the upside, the advance is now approaching initial resistance targets which could limit the topside near-term / offer opportunities on the recovery. 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 price setup and more.

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Euro Price Chart – EUR/USD Weekly

Euro Price Chart - EUR/USD Weekly - Trade Outlook - Technical Forecast

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

Notes: In last month’s Euro Weekly Price Outlook we highlighted the risk for further losses in EUR/USD while noting to be on the lookout, “for a reaction / possible exhaustion into confluence support just lower at 1.0976/94.” Price failed at this region on twice in November with Euro registering a low at 1.0981 last week before marking a weekly doji into the close of the month.

EUR/USD has rallied 0.95% off the lows with the advance now targeting initial resistance at the 61.8% retracement of the October decline at 1.1104- looking for a pivot there. A topside breach / close above would expose subsequent resistance objectives at 1.1187-1.1209 (critical). Key support steady at the yearly low-week close / 61.8% retracement at 1.0976/94 – a close below this threshold would risk significant losses with such a scenario exposing 1.0854.

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

Bottom line: The Euro price reversal is approaching initial hurdles at Fibonacci resistance. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of the 1.11-handle - look for a reaction there for guidance. IF euro is indeed heading higher, intraweek losses should not surpass the weekly open at 1.1024. I’ll publish an updated Euro Price Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

Euro Trader Sentiment – EUR/USD Price Chart

Euro Trader Sentiment - EUR/USD Price Chart - Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +1.51 (60.24% of traders are long) – bearish reading
  • Long positions are0.43% higher than yesterday and 29.21% higher from last week
  • Short positions are 5.42% higher than yesterday and 16.11% 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. Yet traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed EUR/USD trading bias from a sentiment standpoint.

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


Previous Weekly Technical Charts

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--- Written by Michael Boutros, Technical 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.