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Euro Technical Forecast: EUR/USD Threatens Big Break in Q3

Euro Technical Forecast: EUR/USD Threatens Big Break in Q3

Michael Boutros, Strategist

Euro Technical Price Outlook: EUR/USD Weekly Trade Levels

  • Euro updated technical trade levels & sentiment – Weekly Chart
  • EUR/USD marks outside-weekly reversal towards support at yearly lows– risk for price inflection
  • Weekly support 1.0340 (key), 101.50s 1.0000/24; resistance 1.0787-1.0821, 1.0940(critical)
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Euro is poised to mark an outside-weekly reversal against the US Dollar with EUR/USD plunging more than 1.3%. The battle-lines are drawn as price approaches support into the start of Q3 with the technicals highlighting the threat for further losses in the weeks ahead. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart.

Euro Price Chart – EUR/USD Weekly

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

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

Notes: In last month’s Euro Weekly Price Forecast we note that the EUR/USD recovery was, “testing initial resistance hurdles here into 1.08. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops.” The resistance range in focus was 1.0786-1.0821- a region defined by the 38.2% Fibonacci retracement of the yearly range and the 23.6% retracement of he broader 2021 decline. Euro registered a high precisely at 1.0786 that very week before turning sharply lower with the decline now probing support at the yearly low-week close at 1.0409- looking for possible price inflection here.

A break lower would keep the focus on the 2017 low at 1.0340 – losses beyond this threshold would likely fuel another accelerated decline with such a scenario exposing channel support (currently ~101.50s) and the 1999 low-week close / parity at 1.0000/24. Initial weekly resistance eyed at the 2020 low at 1.0637 backed again by 1.0786-1.0821(key). Ultimately, a breach / weekly close above the 2019 close low at 1.0940 would be needed to invalidate the broader downtrend.

Bottom line: Euro has plunged into support near the yearly lows into the start of July / Q3. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be capped by 1.0637 IF price is heading lower on this stretch with a break / close below 1.0340 needed to fuel the next leg lower in price. Stay nimble heading into the monthly opening-range with US non-farm payrolls on tap next week. I’ll publish an updated Euro Price Outlook once we get further clarity on the near-term EUR/USD technical trade levels- stay tuned!

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 - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +1.97 (66.31% of traders are long) – typically a bearish reading
  • Long positions are4.11% lower than yesterday and 4.08% higher from last week
  • Short positions are3.22% lower than yesterday and 3.70% 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 less net-long than yesterday but more 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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Eurozone / US Economic Calendar

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

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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