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EUR/USD Technical Price Outlook: Euro Rally at Risk into Resistance

EUR/USD Technical Price Outlook: Euro Rally at Risk into Resistance

Michael Boutros, Strategist

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

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD rebound off downtrend support now approaching downtrend resistance
  • Support 1.0562, 1.0541, 1.0352/85(key)– Resistance 1.0726, 1.0787-1.0805 (critical), 1.0922
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Euro surged more than 3.7% against the US Dollar after turning from key technical support at the month lows. The advance is now eyeing major downtrend resistance and the focus is on a reaction into this threshold in the coming days. These are the updated targets and invalidation levels that matter on the EUR/USD technical price charts this 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 my last Euro Price Outlook we highlighted a near-term range in EUR/USD just above support while noting that a, “break / close below 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.” Euro registered an intraday low at 1.0348 before reversing higher with the rally now testing confluent resistance at the median-line / 2020 low-day close around 1.0726. A more significant resistance zone is eyed just higher at the 38.2% Fibonacci retracement of the yearly range / March low at 1.0787-1.0805. Risk for near-term topside exhaustion into these levels

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 high with an embedded ascending channel guiding this recovery. Note that channel resistance now converges on 1.0726 and a daily close above this threshold would keep thee focus on key resistance into the upper parallels. Initial support now eyed at the 2020 low (1.0637) backed by the weekly / monthly opens at 1.0562 and 1.0541- a close below this threshold would be needed to mark resumption of the broader downtrend towards key support again at 1.0352/85.

Bottom line: The Euro recovery off downtrend support is now approaching downtrend resistance. From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch towards 1.08 – losses should be limited by the weekly open IF price is indeed heading higher on this stretch with a close above the upper parallel needed to suggest a more significant low was registered last week. Stay nimble heading into the extended holiday break with US Core PCE data on tap Friday. 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 +1.76 (63.76% of traders are long) – typically bearish reading
  • Long positions are1.23% lower than yesterday and 14.09% lower from last week
  • Short positions are 7.70% higher than yesterday and 25.05% 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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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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