Euro Forecast: EUR/USD Recovery Puts Monthly-Open Hurdle in Focus
Euro Technical Price Outlook: EUR/USD Weekly Trade Levels
- Euro updated technical trade levels & sentiment – Weekly Chart
- EUR/USD breakdown rebounds off Fibonacci support- bear market recovery or reversal?
- Risk for deeper setback while below the 1.22-handle – Key daily support at 1.1835
Euro surged more than 1.3% off last week’s lows against the US Dollar after rebounding off Fibonacci support on an outside-day reversal on Friday. The immediate focus is on a reaction at key resistance just higher for guidance with the recovery vulnerable into the yearly high-close. 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 technical setup and more.
Euro Price Chart – EUR/USD Weekly
Notes: In my last Euro Weekly Price Outlook we noted that the EUR/USD, “breakout has extended into broader uptrend resistance and we’re looking for a reaction up here in the days ahead… failure to mount 1.2337 on a weekly close basis would threaten a larger price correction within the confines of the broader uptrend.” That week marked the high in Euro with price dropping more than 2.9% before rebounding of the 23.6% retracement of the 2020 yearly advance at 1.1945 late-last week.
Monthly open resistance stands at 1.2128 with bearish invalidation now set to the 1.2197-1.2219- a region defined by the 61.8% Fibonacci retracement of the year-to-date range and the January high-week reversal close. A breach / close above this threshold would be needed to mark resumption of the broader EUR/USD uptrend. Initial support steady at the 1.20-handle backed by 1.1945 and the August high-week reversal close at 1.1835- a break / close below would suggest a more significant high was registered last month with such a scenario exposing the 38.2% retracement at 1.1695.
Bottom line: The Euro breakdown has rebounded off initial Fibonacci support and while further advances may be likely near-term, the threat for a larger setback remains while below the yearly high-day close. From a trading standpoint, on the lookout for topside exhaustion / swing high while below 1.2219 IF price is indeed heading lower with a break / close below 1.1835 needed to suggest a larger reversal is underway. Ultimately, a close above yearly open resistance at 1.2239 is needed to shift the focus back towards the multi-year highs in Euro. Review my latest Euro Price Outlook for a closer look at the near-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
- A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -1.39 (41.82% of traders are long) – weak bullish reading
- Long positions are2.92% higher than yesterday and 8.30% lower from last week
- Short positions are11.54% lower than yesterday and 12.05% 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. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.
Key Eurozone / US Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Previous Weekly Technical Charts
- US Dollar (DXY)
- Japanese Yen (USD/JPY)
- Crude Oil (WTI)
- Gold (XAU/USD)
- Australian Dollar (AUD/USD)
- Canadian Dollar (USD/CAD)
- Sterling (GBP/USD)
--- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.