Euro Technical Forecast: EUR/USD Post-Election Sell-off Tests Support

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro marks outside-weekly reversal off resistance- off more than 2.3% in November
• EUR/USD post-election sell-off testing major support pivot- US inflation, retail sales on tap
• Resistance 1.0740/77 (key), ~1.0870, 1.0939– Support 1.0587-1.0641 (key), 1.0508, 1.0448

Euro has plummeted more than 2.8% off the monthly high with the post-election rally in the US Dollar plunging EUR/USD into support near the yearly lows- risk for price inflection into this key pivot zone. Battle lines drawn on the Euro weekly technical chart.

Euro Price Chart – EUR/USD Weekly

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

Technical Outlook: In last month’s Euro Technical Forecast we noted that EUR/USD was, “testing confluent support into the close of the month and while the medium-term threat remains lower, the immediate decline may be vulnerable here… rallies should be limited to 1.0939 IF Euro is heading lower on this stretch with a close below 1.0740 needed to mark downtrend resumption.”

Euro rallied more than 1.6% in the following weeks to briefly register an intraday high at 1.0937 before reversing sharply lower. The break of key support last week is has already extended into the next major lateral zone at 1.0587-1.0641- a region defined by the 2023 low-week close (LWC), the 2024 low, and the yearly low-close. We’re looking for possible exhaustion / price inflection into this zone over the next few days.

A break / weekly close below would expose the 2023 low-close at 1.0508- note that the 25% parallel converges on this zone into the close of the month- look for a larger reaction there IF reached. Subsequent support objective seen at the 2023 low at 1.0448 and the 2016 low at 1.0352.

Key resistance is now back at the 61.8% retracement / February low-week close (LWC) at 1.0740/77- a breach / close above this threshold would be needed to suggest a more significant low was registered / alleviate further downside pressure. Subsequent resistance eyed at the 52-week moving average (currently ~1.0870) backed again by the March HWC at 1.0939 (broader bullish invalidation).

Bottom line: The post-election plunge is now testing a major support zone at the yearly range lows – risk for price inflection. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to the median-line / 1.0777 IF price is heading lower on this stretch with a close below 1.0587 needed to fuel the next leg of the decline.

Keep in mind we get the release of key US inflation data (CPI) on Wednesday with the retail sales on tap Friday. Stay nimble into the releases and watch the weekly close here for guidance. I’ll publish an updated Euro Short-term Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex