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Euro Technical Forecast: EUR/USD Pressured into ECB- Breakout Levels

Euro Technical Forecast: EUR/USD Pressured into ECB- Breakout Levels

Michael Boutros, Strategist

Euro Technical Price Outlook: EUR/USD Weekly Trade Levels

  • Euro updated technical trade levels & sentiment – Weekly Chart
  • EUR/USD slumps 0.2% ahead of ECB rate decision
  • Weekly support 1.1569, 1.1445/92 (critical); resistance 1.17 bearish invalidation ~1.1840s
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Euro is down more than 0.2% against the US Dollar since the start of the week with EUR/USD trading just above support heading into the European Central Bank interest rate decision tomorrow. The recent recovery keeps Euro within the confines of a multi-month down-trend and we’re looking for the ECB to provide guidance as price holds above the yearly lows. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart heading into the release. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Euro technical setup and more.

Euro Price Chart – EUR/USD Weekly

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

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

Notes: In my last Euro Weekly Price Outlookwe noted that EUR/USD had, “plummeted into support at a critical multi-year pivot zone into the start of the month. From a trading standpoint a good zone to reduce short-exposure / lower protective stops.” The level in focus was the 2019 high at 1.1570- two weekly attempts failed to close below this threshold with Euro rallying 1.22% off the lows – is an exhaustion low in place?

Note that this recovery is taking place within the confines of the descending pitchfork formation we’ve been tracking off the yearly high with the 25% parallel serving as resistance for the past two-weeks. Ultimately a breach / close above confluent resistance at the 1.17-handle would be needed to suggest a more significant low is in place with such a scenario exposing the median-line (currently ~1.1840s). Weekly support steady at 1.1570 with a break below this threshold keeping the focus on a major technical confluence at the lower parallel / 2019 yearly open / 50% retracement of the 2020 advance at 1.1445/92- look for a larger reaction there IF reached.

Bottom line: Euro’s recovery off the yearly lows remains vulnerable while within this embedded channel (red). Rallies should be capped by the 1.17 IF price is heading lower on this stretch with a break exposing critical support into the lower parallels- an area of interest for possible downside exhaustion If reached. We’ll be looking for guidance into the weekly close with the ECB on tap tomorrow. I’ll publish an updated Euro Price Outlook once we get further clarity on 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

Euro Trader Sentiment - EUR/USD Price Chart - Euro Retail Positioning - EURUSD Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +1.19 (54.24% of traders are long) – typically neutral reading
  • Long positions are5.39% lower than yesterday and 8.12% lower from last week
  • Short positions are9.14% higher than yesterday and 22.72% higher 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse higher despite the fact traders remain net-long.

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Key Eurozone / US Data Releases

Eurozone / US Economic Calendar - EUR/USD Key Data Releases - ECB - FED

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- 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.

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