Euro Short-term Technical Outlook: EUR/USD December Downtrend Test

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

• Euro February opening-range intact into the close of the month– straddling 200-DMA
• EUR/USD rebound off downtrend support now testing resistance- risk for price inflection
• Resistance 1.0865/97, 1.0969, 1.1060- Support 1.0769, 1.0704/12 (key), 1.0635

Euro is poised for a second daily decline after responding to technical resistance this week. The February opening-range is preserved heading into the close and the focus is on a reaction off this zone with the multi-week rally now vulnerable into the monthly highs. These are the updated targets and invalidation levels that matter on the Euro short-term technical charts heading into March.

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 my last EUR/USD Short-term Technical Outlook we noted that, “A multi-week decline in Euro takes price into the first major support hurdles with the weekly opening-range taking shape just above- risk for possible downside exhaustion within the December downtrend.” The support zone in focus was at 1.0704/12 – “a region defined by the 2023 objective yearly open and the 61.8% Fibonacci retracement of the October advance. The focus is on possible price inflection off these levels in the days ahead.”

Euro briefly registered an intraday low one-week later at 1.0695 before reversing sharply higher with EUR/USD rallying more than 1.8%. The advance has been faltering at confluent resistance for the last two-week at the 38.2% retracement of the December decline and the objective monthly opening-range highs at 1.0865/97 – the focus is on a reaction off this mark with the recent recovery now vulnerable while below multi-month downtrend resistance.

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 pitchfork formation extending off the November / December highs with this week’s opening-range taking shape just below resistance. Initial support rests at the 61.8% Fibonacci retracement of the monthly advance at 1.0769 – note that the 61.8% parallel converges on this threshold over the next few days. A break lower would expose key support again at 1.0704/12- a daily close below this threshold is still needed to mark downtrend resumption towards the May low at 1.0635.

A topside breach / daily close above the 1.09-handle would be needed to invalidate the December downtrend / suggest that a more significant low was registered this month. Subsequent resistance objectives eyed at the 61.8% retracement at 1.0970 and the December high-week close at 1.1060- look for a larger reaction there IF reached.

Bottom line: A rebound off downtrend support is now responding to downtrend resistance- look for a breakout of the weekly opening-range for guidance with the multi-week advance vulnerable sub-1.09. From a trading standpoint, losses should be limited to 1.0769 IF price is heading for a breakout here with a close above 1.09 needed to fuel the next leg higher.

Keep in mind we get the release of key US inflation data tomorrow with Non-Farm Payrolls (NFP) on tap next week- stay nimble into the March opening-range. 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