Euro Short-term Outlook: EUR/USD Bulls Eye the Break- NFP, Fed on Tap

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

• Euro bulls eye resistance ahead of US Non-Farm Payrolls- risk for price inflection
• EUR/USD April rally remains constructive above 200-day moving average- NFP on tap
• Resistance 1.0895, 1.0933/39, 1.10 - Support 1.0828, 1.0787/95 (key), 1.0704/21

Euro is virtually unchanged since the start of the week with EUR/USD trading just below near-term resistance ahead of tomorrow US employment report. The battle lines are drawn as the April rally approaches multi-month highs with the key inflation data and the Fed on tap next week. These are the updated targets and invalidation levels that matter on the Euro short-term technical charts.

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Euro Price Chart – EUR/USD Daily

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

Technical Outlook: In last month’s EUR/USD Short-term Technical Outlook we noted that Euro’s, “recovery off support is now testing downtrend resistance- the immediate advance remains vulnerable while below 1.0792-1.0807.” EUR/USD broke higher the following week with the April rally extending nearly 3% into the June open. The advance has been halted by the 1.618% extension of the April rally at 1.0895 and the immediate focus on a breakout of the monthly opening-range for guidance here.

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 pitchfork formation extending off the April / May lows with the price riding the median line over the past few days.

Initial support rest with the weekly/monthly opening-range lows at 1.0828 (also now the 52-week moving average) with key support / near-term bullish invalidation just lower at 1.0787/95- a region define by the 200-day moving average, the April open, and the 38.2% retracement of the April rally. Note that this level converges on the lower parallel over the next few days and a break / close below this threshold would be needed to nullify the multi-month rally. The next major support level rests with the 2023 yearly open / 61.8% Fibonacci retracement of the April rally at 1.0704/21.

A topside breach here keeps the focus on the next major resistance hurdles at the 61.8% retracement of the December decline / March high-day close (HDC) at 1.0933/39 and the highlighted slope confluence near 1.10 – both levels of interest for possible topside exhaustion / price inflection IF reached. Ultimately, a weekly close above the yearly open / December high-day close (HDC) at 1.1038/60 would be needed to validate a breakout of the yearly opening range / fuel the next major move.

Bottom line: The April rally is testing resistance here on building momentum divergence with major event risk on tap over the next week. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to the 200-day moving average IF price is heading higher on this stretch with a close above 1.0939 needed to fuel the next advance towards the upper parallels (1.10)- look for a larger reaction there IF reached.

Note that US Non-Farm Payrolls (NFP) is on tap tomorrow with the key inflation data and the highly anticipated FOMC interest rate decision and updated economic projections looming next week. For now, the monthly opening-range is defined by the June 3^rd candle- look for a breakout of this range and watch the weekly closes here for guidance. 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