Euro Weekly Price Outlook: EUR/USD Recovery Could be Short Lived

2019-05-05 04:00:00 Michael Boutros

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EUR/USD Weekly Price Chart
EUR/USD Trader Sentiment
Relevant Euro / USEconomic Data Releases
Other Technical Forecast
Other Weekly Technical Forecast

EUR/USD weekly technicals – price testing multi-year slope support; risk is lower sub-1.13
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Euro is up 0.54% against the US Dollar this week after reversing from long-term slope support. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. 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

Notes:In my previous EUR/USD Weekly Technical Outlook we note that, “Weekly support remains at 1.1186 with a break below the 2017 pitchfork support around 1.1130s needed to validate a larger break of the multi-year uptrend formation in Euro.” Price briefly registered a low at 1.1110 last week before reversing sharply off the lower parallel with Euro now attempting to mark a weekly close back above the 61.38% retracement at 1.1186 into the close of the week.

Resistance / near-term bearish invalidation stands with the August low / 2018 trendline at 1.1301 – A weekly close above this threshold is needed to suggest a more significant low is in place with such a scenario targeting the 2018 yearly open at 1.1445- look for a bigger reaction there IF reached.

A break below 2017 pitchfork support would shift the focus towards consolidation support extending off the 2018 lows, currently around ~1.1040s - weakness beyond this threshold would risk substantial losses for Euro with subsequent weekly support objectives eyed at 1.0854 & the 78.6% retracement at 1.0815.

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Bottom line:Euro has responded to multi-year slope support and we’re looking for signs of basing in price action with a close above channel resistance needed to clear the way. A close here below 1.1186 would suggest / highlight the risk for another test of the lows before the potential for a larger recovery. From a trading standpoint, the risk remains lower sub-1.13 but be on the lookout for a downside price exhaustion / long-entries on a final test into the 2018 trendline. Review my latest EUR/USD Price Outlook for a look at the near-term technical picture.

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EUR/USD Trader Sentiment

A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +1.54 (60.6% of traders are long) – bearish reading
Traders have remained net-long since April 12th; price has moved 0.6% lower since then
Long positions are 9.9% higher than yesterday and 17.5% lower from last week
Short positions are 11.4% lower than yesterday and 21.4% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURUSD 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 EURUSD-bearish 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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