Euro Short-term Technical Outlook: EUR/USD Plunge Pauses at Support

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

• Euro plummets more than 3.7% off December highs – approaching initial support hurdles
• EUR/USD risk for near-term exhaustion- threat remains lower while below 200-DMA
• Resistance 1.0787, 1.0830/35, 1.0881/98- Support 1.0737, 1.0704/12 (key), 1.0635

Euro has been on the defensive since the start of the year with EUR/USD poised for a fourth consecutive weekly decline. The sell-off takes price towards a major pivot zone and while the broader outlook remains weighted to the downside, the immediate decline may be vulnerable into key technical support just lower. 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 Euro Short-term Technical Outlook we noted that EUR/USD had, “carved a well-defined monthly opening-range just above uptrend support- the focus is on a possible breakout in the days ahead. From at trading standpoint, the threat of a larger correction lower remains while below 1.1040…” Euro broke support the following week with price plunging nearly 3% off the January highs – the decline halted near confluent support this week at the 100% extension of the late-December decline at 1.0738. A more significant support zone is seen just lower 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 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 a descending pitchfork formation extending off the November / December highs with price rebounding off the median-line early in the week. The immediate focus is on this recovery with the weekly opening-range preserved just above support – look to the breakout for guidance here.

Weekly-open resistance is eyed at 1.0787 backed by 1.0830/35 – a region defined by the 61.8% retracement of the month-to-date range, the July swing low, and the 200-day moving average. A breach / daily close above the 38.2% retracement of the late-December decline / February high at 1.0881/98 would ultimately be needed to suggest a more significant low was registered this week (bearish invalidation).

A break / daily close below the 1.07-handle would threaten downtrend resumption with such a scenario exposing subsequent support objectives at the May low at 1.0635 and the 1.618% extension near 1.0575.

Bottom line: 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. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to 1.0835 IF price is heading lower on this stretch with a close below the 1.07-handle needed to fuel the next leg lower in price. 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