Euro Short-term Outlook: EUR/USD Bears Halted Ahead of ECB, FOMC

Euro Technical Outlook: EUR/USD Short-term Trade Levels

• Euro eight-week plunge halted at 2023 yearly open support
• EUR/USD weekly opening-range set ahead of ECB – FOMC on tap next week
• Resistance 1.0785, 1.0827/43 (key), 1.0911- Support 1.0700/04, 1.0645, ~1.0580s

Euro is attempting to snap an eight-week sell-off with a decline of more than 5.2% off the yearly highs now testing support at the objective 2023 yearly open. The stage is set, and the battle lines drawn heading into the ECB interest rate decision tomorrow with the FOMC on deck next week. These are the updated targets and invalidation levels that matter on the Euro short-term technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this EUR/USD technical setup and more. Join live 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 was, “testing multi-month trend support with the August opening-range taking shape just above. From a trading standpoint, the immediate focus is on a breakout of this consolidation pattern for guidance (1.0911-1.1051). From a trend standpoint, rallies should be limited to 1.1137 IF price is heading lower with a close below 1.09 needed to fuel the next leg.”

Euro registered an intraday high at 1.1065 in the following days before breaking sharply lower with EUR/USD plunging more than 3.4% off the August highs. The decline takes price into the objective yearly open at 1.0704 – looking for a breakout of this near-term range with the broader threat still weighted to the downside while below the September open.

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 continuing to trade within the confines of a descending channel formation extending off the July high. Initial resistance is eyed at the 61.8% Fibonacci retracement of the yearly range at 1.0785 and is backed closely by 1.0827/43- a region defined by the 200-day moving average, the June low, and the September monthly open. We’ll reserve this threshold as our near-term bearish invalidation level and a break / close above would be needed to fuel a larger recovery towards the 38.2% retracement at 1.0911.

A break / close below the weekly open at 1.07 is needed to mark resumption of the operative downtrend with such a scenario exposing subsequent support objectives at the 2023 low-day close (1.0645), the lower parallel (currently ~1.0580s) and the yearly low close at 1.0515- look for a larger reaction there IF reached.

Bottom line: Euro has set the weekly opening-range just above yearly open support with major event risk on tap over the next week- look to the breakout of near-term guidance. From a trading standpoint, rallies should be limited to the 1.0843 IF price is heading lower on this stretch with a close below 1.07 needed to fuel the next leg lower.

Keep in mind that the downtrend has continued to mature and there’s significant event risk on tap over the next week - risk for a possible exhaustion washout remains. Stay nimble here. Review my latest Euro Weekly Technical Forecast for a closer look at the longer-term EUR/USD trade levels.

Key EUR/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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

Follow Michael on Twitter @MBForex