Euro Price Outlook: EUR/USD Battle Lines Drawn ahead of FOMC

2019-12-10 16:30:00

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Euro Price Chart – EUR/USD Daily
Euro Price Chart – EUR/USD 120min
Euro Trader Sentiment – EUR/USD Price Chart
Key Euro / US Data Releases
Active Trade Setups

Euro recovery targeting key near-term resistance pivot- constructive while above December open
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Euro reversed sharply off confluence resistance last week and the recent recovery against the US Dollar may be vulnerable while below this key threshold. These are the updated targets and invalidation levels that matter on the EUR/USD price charts. 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 Daily

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

Technical Outlook: Euro posted an outside-day reversal off confluence resistance last week around the 1.11-handle with the pullback rebounding off slope support early in the week. Key near-term resistance remains with the 61.8% retracement at 1.1101 with a breach / close above needed to fuel the next leg higher in EUR/USD. Initial support rests at the 25% parallel (currently ~1.1060s) with bullish invalidation now raised to the objective monthly open at 1.1023.

Euro Price Chart – EUR/USD 120min

Notes: A closer look at Euro price action shows EUR/USD trading within the confines of a near-term ascending pitchfork formation extending November lows. Note that the median-line converges Fibonacci resistance with the September high and May lows highlighting a critical range at 1.1104/10 – a topside breach above this threshold would expose subsequent resistance objectives at 1.1135 and 1.1167. Critical resistance remains at 1.1186-1.1208- look for a bigger reaction there IF reached.

Initial at 1.1065 with a break of the weekly low risking a test of the 61.8% retracement / December open at 1.1023/32- an area of interest for possible exhaustion / entries IF reached. A close below this threshold would risk another test of key support at the low-week close / 61.8% retracement of the October rally at 1.0976/94 – critical.

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Bottom line: The Euro recovery is trading just below confluence resistance around the 1.11-handle and leaves the immediate recovery vulnerable near-term while below. From at trading standpoint, looking for an exhaustion low to fade heading into the FOMC interest rate decision (preferably on a test of the lower parallels) with a topside breach above the median-line needed to keep the long-bias viable. Review my latest Euro Weekly Price Outlook for a closer look at the longer-term EUR/USD technical trading levels.

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Euro Trader Sentiment – EUR/USD Price Chart

A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -1.16 (46.22% of traders are long) – weak bullish reading
Long positions are 7.02% higher than yesterday and 27.21% lower from last week
Short positions are23.20% higher than yesterday and 41.57% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Traders are further net-short than yesterday and 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.

EUR/USD Bullish

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