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Euro Price Outlook: Euro Pop Setting Up for a Drop- EUR/USD Levels

Euro Price Outlook: Euro Pop Setting Up for a Drop- EUR/USD Levels

Michael Boutros, Strategist

Euro Technical Price Outlook: EUR/USD Near-term Trade Levels

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD plunge rebounds off near-term downtrend support– recovery vulnerable
  • Resistance 1.1966, 1.2007 - Support at 1.1855, 1.1824 critical
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Euro rallied more 0.5% against the US Dollar since the start of the week EUR/USD rebounding just ahead of multi-month trend support. Our focus is on possible exhaustion on this recovery with near-term risk weighted to the downside while below the big figure. These are the updated targets and invalidation levels that matter on the EUR/USD technical price charts heading into the close of the week. Review my latest Strategy Webinar for an in-depth breakdown of this Euro technical setup and more.

Euro Price Chart – EUR/USD Daily

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

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

Technical Outlook: In last month’s Euro Price Outlook we noted that, “The Euro rally has extended into yearly open resistance and the advance may be vulnerable near-term while below 1.2239/61.” EUR/USD registered a high at 1.2266 before turning lower in to the June open with price plummeting more than 3.3% off the monthly high. The decline turned just ahead of multi-month uptrend support this week with the rebound stalling yesterday near the August high at 1.1966. Is this just a relief rally or more of a reversal of trendline support?

A topside breach would risk a stretch towards the 2018 yearly open / 38.2% Fibonacci retracement of the May decline at 1.2005/07 backed by the 100-day moving average at 1.2030 – both levels of interest for possible topside exhaustion IF reached. Support rests with the lower parallel (blue) with a break / close below 1.1824/35 needed to suggest a larger trend reversal may be underway.

Euro Price Chart – EUR/USD 120min

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

Notes: A closer look at Euro price action shows EUR/USD trading within a descending pitchfork formation extending off the May / June highs with this week’s rebound coming off downtrend support. The recovery may be trading within a near-term bearish flag formation – watch for the break. Initial support eyed at 1.1919 backed by the weekly open at 1.1854 and key support at 1.1824/35.

Bottom line: Euro has rebounded off near-term downtrend support and the focus is on this immediate recovery. From at trading standpoint, be on the lookout for possible topside exhaustion while below the 1.20-handle with a break / close below 1.1824 needed to suggest a larger sell-off is underway. 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 Sentiment - EUR/USD Price Chart - Euro Retail Positioning - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-longe EUR/USD - the ratio stands at -+1.29 (56.36% of traders are long) – weak bearish reading
  • Long positions are 3.16% lower than yesterday and 10.95% higher from last week
  • Short positions are8.05% higher than yesterday and 0.56% 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. Trader are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed EUR/USD trading bias from a sentiment standpoint.

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Key Euro / US Economic Data Releases

Key Euro / US Economic Data Releases - EURUSD Weekly Event Risk

Economic Calendar - latest economic developments and upcoming event risk

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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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