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Euro Price Outlook: EUR/USD Bears to Face FOMC – Trade Levels

Euro Price Outlook: EUR/USD Bears to Face FOMC – Trade Levels

2020-01-29 16:30:00
Michael Boutros, Technical Strategist
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Euro Technical Price Outlook: EUR/USD Near-term Trade Levels

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD trading just above technical support ahead of FOMC rate decision
  • Immediate focus is on daily close with respect to 1.1017/19

Euro has plummeted more than 2% against the US Dollar since the start of the year with EUR/USD now trading just above a technical support barrier ahead of today’s FOMC interest rate decision. These are the updated targets and invalidation levels that matter on the EUR/USD price charts heading into the release. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie trade setup and more.

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Euro Price Chart – EUR/USD Daily

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

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

Technical Outlook: In my last Euro Price Outlook we noted that the EUR/USD recovery was approaching, “Initial resistance objectives at 1.1166 and 1.1180/86 – look for a more significant reaction there IF reached.” Price registered a high at 1.1173 the following day before reversing sharply with the Euro plummeting more than 1.6% to test the December lows.

The immediate focus heading into the FOMC is on today’s close with respect tot the 1.1017/19 Fibonacci confluence – a region defined by 100% extension of the late-December decline and the 61.8% retracement of the October advance. A close below would keep the focus on subsequent support objectives at the 2019 low-week close / November low at 1.0976/82 and 1.0956 – both levels of interest for possible downside exhaustion IF reached.

Euro Price Chart – EUR/USD 120min

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

Notes: A closer look at Euro price action sees EUR/USD continuing to trade within the confines of the descending pitchfork formation we were tracking into the close of the year with the 25% parallel currently highlighting near-term support at 1.0976/82. Initial resistance eyed at the weekly open / opening-range highs at 1.1031/38 – a breach there is needed to shift the near-term focus back to the long-side with such a scenario targeting the upper parallels / 1.1080.

{{GUIDE|EUR |Download Our Latest Quarterly Euro Price Forecasts!}}

Bottom line: Euro is trading just above technical support confluence heading into today’s FOMC interest rate decision and the immediate short-bias may be vulnerable while above 1.0976. Watch the close in relation to 1.1017/19. From a trading standpoint, look to reduce short-exposure / lower protective stops on a test of this support zone – keep an eye out for possible downside exhaustion while above with a breach of the weekly range needed suggest a more significant near-term low is in place. Review my latest Euro Weekly Price Outlook for an in-depth look at the longer-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

Euro Trader Sentimnt - EUR/USD Price Chart - Euro vs US Dollar Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +2.43 (70.82% of traders are long) – bearish reading
  • Long positions are 11.33% higher than yesterday and 21.44% higher from last week
  • Short positions are14.16% lower than yesterday and 28.81% 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 & 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.
EUR/USD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -14% -5% -12%
Weekly -5% 20% 0%
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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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