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EUR/USD Technical Outlook: Euro Drops to 20yr Low- Breakdown Levels

EUR/USD Technical Outlook: Euro Drops to 20yr Low- Breakdown Levels

Michael Boutros, Strategist

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

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD plunges to fresh yearly lows- sell-off approaching pivot zone at downtrend support
  • Support 1.0125, 1.0000 (key), 9902– Resistance 1.0270s, 1.0352/85, 1.0483 (critical)
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Euro plummeted more than 2.3% against the US Dollar since the start of the week with EUR/USD now approaching downtrend support at fresh 20-year lows. We’re on the lookout for possible price inflection down here for guidance with US Non-Farm Payrolls on tap tomorrow. These are the updated targets and invalidation levels that matter on the EUR/USD technical price charts.

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 had, “carved out the weekly / monthly opening-range just below downtrend resistance and the focus is on a breakout in the days ahead.” The range broke just one day later with an outside-day reversal plunging more than 3.5% into the 2016 low / low-day close at 1.0352/85. Euro continued to test this confluence zone into the close of June with a decisive break lower into the start of the week now taking price into downtrend support. While the break does keep the broader downtrend in play, the immediate decline may be vulnerable here and we’re on the lookout for possible inflection off this slope.

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 a descending pitchfork formation extending off the yearly high. A sharp sell-off early in the week has fueled a break below the median-line with the 25% parallel converging on the 1.0125 pivot zone just lower- a break below this threshold is needed to drive the next leg towards parity (1.0000) at the lower parallel- look for a larger reaction there IF reached. Initial resistance eyed at the median-line (currently ~1.0270s) backed by 1.0352/85 with bearish invalidation now lowered to the objective monthly open at 1.0483.

Bottom line: A break to fresh yearly lows keeps the broader outlook weighted to the downside in Euro – that said, we’re looking for possible price inflection just lower and the immediate decline may be vulnerable into 1.0125. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be capped by 1.0385 IF price is heading lower on this stretch with a break / close below this slope needed to fuel a test of parity at the lower parallels. Stay nimble heading into US Non-Farm Payrolls (NFP) tomorrow with the event likely to fuel some volatility here / offer further clarity. 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 - Euro Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +2.61 (72.27% of traders are long) – typically bearish reading
  • Long positions are1.03% higher than yesterday and 16.84% higher from last week
  • Short positions are 1.34% higher than yesterday and 10.92% 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 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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Euro / US Economic Calendar

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

Economic Calendar - latest economic developments and upcoming event risk

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- 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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