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EUR/USD Technical Outlook: Euro Coils into ECB- Breakout Potential

EUR/USD Technical Outlook: Euro Coils into ECB- Breakout Potential

Michael Boutros, Strategist

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

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD carves weekly / monthly range below downtrend resistance- breakout pending
  • Support 1.0619/37, 1.0516/37 (key), 1.0352/85– Resistance 1.0787-1.0805 (critical), 1.0922, 1.10
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Euro is virtually unchanged against the US Dollar this week with EUR/USD testing multi-month downtrend resistance since the start of the month. We’re on breakout watch with the battle-lines drawn heading into tomorrow’s European Central Bank interest rate decision. 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 Short-term Trade Outlook -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 EUR/USD, “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.” Price registered a high at 1.0786 into the close of May before retracing nearly 38.2% of the rally into the June open. We’re looking for a breakout of the 1.0619-1.0805 zone for guidance with the monthly opening-range set just below downtrend resistance.

Euro Price Chart – EUR/USD 240min

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

Notes: A closer look at Euro price action shows EUR/USD continuing to trade within the confines of an ascending pitchfork formation extending off the May low with price turning from confluence resistance at the upper parallel last week at 1.0787-1.0805 – a region defined by the 38.2% Fibonacci retracement of the yearly range and the March low. A topside breach / daily close above would be needed to invalidate the broader February downtrend with such a scenario exposing subsequent resistance objectives at 1.0922, the 1.10-handle and the 61.8% retracement at 1.1057.

Initial support rests at 1.0619/37 backed by the 61.8% retracement of the May rally / May open at 1.0516/41- a break / daily close below this threshold would be needed to mark resumption of the broader downtrend towards 1.0352/85 once again.

Bottom line: Euro has carved out the weekly / monthly opening-range just below downtrend resistance and the focus is on a breakout in the days ahead. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops. Losses should be limited by 1.0516 IF Euro is indeed heading higher on this stretch with a close above 1.08 needed to clear the way for a larger advance. Stay nimble into the ECB interest rate decision tomorrow with key US inflation 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 Retail Positioning - Short-term Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +1.33 (57.12% of traders are long) – typically weak bearish reading
  • Long positions are0.46% lower than yesterday and 0.23% lower from last week
  • Short positions are 5.07% higher than yesterday and 0.62% 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 - 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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