Euro Short-term Technical Outlook: EUR/USD at Make-or-Break Resistance

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

• Euro rally exhausts into uptrend / multi-year consolidation resistance
• EUR/USD risk for exhaustion / price inflection at major pivot zone – CPI on tap
• Resistance 1.0933/48, 1.10, 1.1038/60 (key)- Support 1.0865/79, 1.0797 (key), 1.0724

Euro surged more than 3.2% off the June lows with EUR/USD exhausting into uptrend resistance early in the week. The rally takes price into a critical resistance range at the top of a multi-year consolidation pattern and the battle lines are drawn heading into the close of the 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 was approaching the upper bounds of a massive consolidation pattern and that, “From a trading standpoint, look to reduce long-exposure / raise protective stops on a rally towards the upper parallels- losses should be limited to 1.0755 IF price is heading higher on this stretch with a close above 1.0888 needed to validate a larger price breakout.”

Price broke higher a few days later before exhausting into critical resistance at 1.0933/48- a region defined by the 61.8% Fibonacci retracement of the December decline and the March high-close. A plunge of more than 1.5% into the close of July rebounded off slope support early in the month with EUR/USD registering a low at 1.0776 before surging 2.15%. That rally is once again testing key resistance and although we did mark a daily close just above this level yesterday, the intraday-high failed at uptrend resistance and the threat remains for some exhaustion 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 continuing to trade within the confines of an ascending pitchfork formation extending off the April / June lows with a sliding parallel catching the highs yesterday around the 1.10-handle. The weekly opening-range is set just above near-term support at 1.0865/79- a region defined by the 61.8% retracement of the most recent advance, the June high-day close (HDC), and the 38.2% retracement of the June rally. Key support / bullish invalidation is now set to the 61.38% retracement at 1.0797- losses below this threshold would suggest a larger correction is underway.

Initial resistance steady at 1.0933/47 with a breach / daily close above the median-line needed to fuel mark uptrend resumption towards 1.10 and the yearly open / December HDC at 1.1038/60- look for a larger reaction there IF reached. Subsequent resistance objectives eyed at the December high near 1.1139 in the event of a breakout.

Bottom line: Euro is threatening a major breakout at key resistance early in the month and the immediate focus is on possible pivot off this zone / a breakout of the objective weekly opening-range. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 1.0797 IF price is heading higher on this stretch with a close above the median-line needed to fuel the next major leg.

Keep in mind that the August opening-range is now defined by this two-day stretch off the lows with key inflation data on tap from the US next week. Stay nimble here and watch the weekly closes 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