Euro short-term outlook: EUR/USD trend correction on the horizon

Euro technical outlook: EUR/USD short-term trade levels

Euro four-week rally falters into yearly highs / Fibonacci resistance
EUR/USD technically constructive while above weekly open
Resistance 1.1076, 1.1186, 1.1275- support 1.0907/09 (key), 1.0843, 1.0705

Euro rallied more than 5.3% off the March lows to register a fresh yearly high this week with a breakout of the April opening-range faltering at Fibonacci resistance ahead of the close. These are the updated targets and invalidation levels that matter on the EUR/USD short-term technical charts.

Discuss this Euro setup and more in the Weekly Strategy Webinars on Monday’s at 8:30am EST.

Euro Price Chart – EUR/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Technical Outlook: In last month’s Euro Short-term Technical Outlook we noted that EUR/USD remained constructive while within the monthly uptrend and that, “Ultimately a breach / close above the yearly high-day close / 78.6% retracement at 1.0909/22 would be needed to mark resumption of the monthly uptrend…” The April opening-range straddled this region with a breakout on Wednesday fueling a test of the 78.6% retracement of the 2022 decline at 1.1076. The technical outlook now remains constructive while above the 1.0909.

Euro Price Chart – EUR/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Notes: A closer look at Euro price action shows EUR/USD trading within the confines of an ascending channel formation extending off the March lows. Look for initial support at 1.10 backed by the weekly open / February high-day close at 1.0907/09 – losses should be limited by this zone IF price is heading higher on this stretch. Ultimately, a break / close below the April open at 1.0843 would be needed to invalidate the March rally / expose a run at yearly-open support at 1.0705.

A topside breach from here exposes subsequent resistance objectives at the 2021 low at 1.1186 and the 61.8% Fibonacci retracement at 1.1275. Critical resistance is eyed a bit higher at the confluence of the broader multi-year downslope and the 61.8% extension of the late-September advance around 1.1441. Look for a larger reaction in price there IF reached.

Bottom line: A breakout of the monthly opening-range keeps the rally intact heading into next week. From at trading standpoint, be on the lookout for possible exhaustion ahead of 1.09 on pullbacks with a breach / close above 1.11 needed to clear the way toward the upper parallels. Losses beyond 1.0843 would suggest a larger reversal may be underway. Review my latest Euro weekly technical forecast for a closer look at the longer-term EUR/USD trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

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