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Euro Price Forecast: Losses Mount as EUR/USD Searches Support

Euro Price Forecast: Losses Mount as EUR/USD Searches Support

Michael Boutros, Strategist

Euro Technical Price Outlook: EUR/USD Weekly Trade Levels

  • Euro updated technical trade levels & sentiment – Weekly Chart
  • EUR/USD plunges into downtrend support – range breakout pending
  • Weekly support 1.0875, 1.0831(key), 1.0656/97; resistance 1.1103, 1.1170, 1.1222(critical)
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Euro is trading just above the yearly-lows against the US Dollar this week with EUR/USD coiling within a broader range at trend support. While the broader outlook remains tilted to the downside, the medium-term focus is on a breakout of a multi-week range just above technical support. The levels are clear heading into this week’s European Central Bank(ECB) interest rate decision. 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

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 our January Euro Weekly Price Forecast we warned that the EUR/USD recovery was, “approaching confluent resistance at 1.1445/60 and we’re looking for possible inflection into this zone.” The rally grinded into this threshold for weeks with an intra-week spike towards the 2019 high-day close at 1.1499 (high registered at 1.1494) failing to mark a weekly close above. The subsequent plunge was halted by confluent support around the 88.6% Fibonacci retracement of the 2020 advance at 1.0831- price is entering a sixth consecutive week within a massive range just above the yearly lows and we’re on breakout watch.

Initial weekly resistance eyed at the March high-week close at 1.1103 backed by the 23.6% retracement of the 2021 decline at 1.1170. Broader bearish invalidation now lowered to 1.1222- a breach / weekly close above would be needed to validate a breakout towards the yearly open at 1.1383. Look for initial support at last week’s close (yearly low-close) at 1.0875 with a close below 1.0831 still needed to mark resumption of the broader downtrend towards 1.0697 and the March 2017 high-week close at 1.0656.

Bottom line: Euro is trading within a well-defined range just above downtrend support at the yearly lows. From at trading standpoint the focus is on a breakout of the 1.0831 – 1.1170 range for guidance with the broader threat weighted to the downside while below 1.1222. Stay nimble heading into US inflation data and the ECB later this week- expect some volatility. 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 vs US Dollar Retail Positioning - EURUSD Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +2.95 (74.65% of traders are long) – typically a bearish reading
  • Long positions are8.76% higher than yesterday and 17.29% higher from last week
  • Short positions are2.92% higher than yesterday and 19.97% 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 and 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.

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Eurozone / US Economic Calendar

Eurozone / US Economic Calendar - EUR/USD Weekly Event Risk - ECB , US Inflation

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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