Euro Technical Analysis: EUR/USD Stalls Inside of Yearly High

EUR/USD, Euro Talking Points:

• EUR/USD showed a strong weekly bar last week as the Fed kicked off a rate cut cycle.
• The currency pairs remained inside of the 2024 high which is inside of the 2023 high, thereby retaining the range potential that’s held for the past 17 months.
• For USD-weakness scenarios, GBP/USD could hold greater attraction than EUR/USD, and perhaps USD/JPY, as well.

EUR/USD continued the advance last week following the rate cut rally following the European Central Bank’s move two weeks ago. There was technical context for bullish continuation as the pair broke through the topside of a bull flag formation but, to date, buyers haven’t been able to push for a re-test of the yearly high at the 1.1200 handle.

There was seemingly an open door for a test of the highs last week as the pair showed three consecutive days of swing highs within 25 pips of that big figure. This week started with pullback but that also shows a bit of indecision as sellers were unable to test below last Thursday’s swing-low.

EUR/USD Daily Price Chart

EUR/USD Bigger Picture

At this point it’s difficult to argue with the intermediate-term outlay in the pair, which has been decisively bullish since the rally began around the Q3 open. The pair was working around the 1.0700 at the time and as USD-weakness, prodded by a sell-off in USD/JPY, continued to drive DXY to fresh lows, EUR/USD continued its upward advance.

But taking a step back, the argument can be made that the pair remains in the confines of a longer-term range and last week’s respect of the 1.1200 handle further speaks to that, as that, itself, is a lower-high from the 2023 swing at 1.1275.

This sets up for an important few weeks as price remains within that shorter-term bullish trend into the Q3 close, with those very obvious resistance levels lurking overhead.

I had written about the US Dollar to finish last week, and if the USD is going to rally, it’s probably going to need some help from EUR/USD bears.

EUR/USD Weekly Price Chart

EUR/USD Shorter-Term Strategy

Sellers made a quick push at the start of this week’s trade but as noted above, they haven’t been able to make much of a mark yet. But – this does set up some additional lower-high context as last week’s stall around 1.1175 is inside of the prior high at 1.1200, which is inside of the 2023 high at 1.1275.

The 1.1140 level that I’ve been tracking in webinars is in-play as of this writing and there’s additional context for a possible lower-high up to prior short-term support, around 1.1155. If bears can defend that, the focus is on tests of deeper support. I’m tracking a Fibonacci level at 1.1081 that helped to bring the post-Fed bounce last week, and that’s followed by a swing at 1.1055.

After that is the 1.1000 level and that’s the price that was vigorously defended into and around the ECB’s rate cut.

Bears aren’t necessarily out of the woods on a first test below 1.1000, however, as the 1.0943 Fibonacci level could be a lead-in for bear trap potential on a bigger picture basis. That’s the 50% mark of the same Fibonacci retracement that set the high last year at the 61.8% (1.1275) and the low so far this year around the 38.2% (1.0611).

EUR/USD Four-Hour Price Chart

--- written by James Stanley, Senior Strategist