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EUR/USD Technical Price Outlook: Euro May Crunch- Breakout Imminent

EUR/USD Technical Price Outlook: Euro May Crunch- Breakout Imminent

Michael Boutros, Strategist

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

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD in consolidation within weekly / monthly range- breakout pending
  • Support 1.0500, 1.1.0462, 1.0352/85(key) – Resistance 1.0637(key), 1.0726, 1.0862
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Euro has been in a tug-of-war with the US Dollar since the start of the month with EUR/USD continuing to contract within the monthly opening-range at fresh multi-year lows. While the broader outlook remains weighted to the downside, a rebound off downtrend support keeps the immediate focus on a breakout of this near-term range for guidance in the days ahead. 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 EUR/USD was “Euro is threatening a much larger breakdown IF price is able to stabilize below 1.0814/31 in the days ahead- exhaustion risk here is high.” Price continued to straddle this zone for more than a week before taking a leg lower with the decline registering a low just pups ahead of confluent downtrend support at the 2015 lows at 1.0462. Monthly & weekly opening range have taken shape just above and we’re looking for the breakout for guidance in the days ahead.

Euro Price Chart – EUR/USD 240min

Euro Price Chart - EUR/USD 240min - Euro vs US Dollar Trade Outlook - EURUSD Technical Forecast

Notes: A closer look at Euro price action shows EUR/USD continuing to trade within the confines the descending pitchfork formation extending off the late-March highs. Note that price is contracting within the weekly / May opening-range just above monthly-open support at 1.0500. Ultimately a break / close below the 1.0462 would be needed to mark resumption towards subsequent support objectives at the lower parallel / 2016 low & low-day close at 1.0352/85- look for a larger reaction there IF reached. A topside breach of the range exposes initial resistance at the median-line / 2020 low at 1.0637- a breach / close above this threshold would be needed to suggest a larger correction is underway with broader bearish invalidation lowered to the March low-day close / 38.2% Fibonacci retracement of the yearly range at 1.0852/62.

Bottom line: Euro has rebounded off downtrend support with the monthly & weekly opening-range preserved heading into Thursday- we’re on breakout watch. From a trading standpoint, the threat remains tilted to the downside while below 1.0637 near-term- look to reduce short-exposure / lower protective stops on a stretch towards 1.0352/85 IF reached. Review my latest Euro Weekly Price Outlook for a closer 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 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 +2.67 (72.72% of traders are long) – typically bearish reading
  • Long positions are 1.85% lower than yesterday and 8.71% lower from last week
  • Short positions are 4.08% lower than yesterday and 1.57% 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. Traders are more net-long than yesterday but less 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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Euro / US Economic Calendar

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

Economic Calendar - latest economic developments and upcoming event risk

Active Technical Setups

- 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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