Euro Short-term Technical Outlook: EUR/USD Rally at Resistance

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

• Euro recovery testing downtrend resistance- March opening-range set below
• EUR/USD multi-week rally vulnerable while below 200-day & 52-week moving averages
• Resistance 1.0792-1.0809 (key), 1.0857, 1.0885- Support 1.0732, 1.0704, 1.0665/82 (key)

Euro was poised to mark a fourth-consecutive weekly rally ahead of the close on Friday with EUR/USD up more than 2% off the yearly lows. The advance takes the exchange rate into a major pivot zone with the monthly opening-range taking shape just below. Battle lines drawn on the Euro short-term technical charts heading into key US inflation data next week.

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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 a bear market recovery was underway with resistance objectives eyed into “the objective monthly open / 38.2% retracement / 200-day moving average at 1.0792-1.0809- both levels of interest for possible topside exhaustion / price inflection IF reached.” Euro briefly registered an intraday high the following week at 1.0812 before pulling back with the May opening-range high now defined by that same region- looking for a reaction up here into downtrend resistance over the next few days.

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 low with the median line further highlighting near-term resistance at 1.0792-1.0809. (Note that the 52-week moving average eyed just higher at 1.0818). A topside breach / close above this threshold is needed to suggest a more significant low was registered last month / validate a larger breakout.  

Initial support rests with the weekly open at 1.0762 and is backed by the 38.2% retracement of the April advance at 1.0732. A break below this upslope would threaten a test of subsequent objectives at the 2023 yearly open at 1.0704 and key support at 1.0665/82- a region defined by the objective May open and the 61.8% Fibonacci retracement. Ultimately a close below this threshold would be needed to mark downtrend resumption towards the yearly low-day close (LDC) at 1.0619 and the 2023 low-week close (LWC) / 78.6% retracement at 1.0587/96.

A topside breach / close above this key pivot zone would suggest am more meaningful reversal is underway with subsequent resistance objectives eyed at the April high-day close (HDC) at 1.0857 and the April swing high at 1.0885- both areas of interest for possible topside exhaustion IF reached.  Key resistance now eyed at the 61.8% retracement / March HDC at 1.0933/39.

Bottom line: A recovery off support is now testing downtrend resistance- the immediate advance remains vulnerable while below 1.0792-1.0807. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops- rallies would need to be limited to this threshold IF rice is heading lower with a close below 1.0665 ultimately needed to mark downtrend resumption.

Keep in mind that the March opening-range has now been established just below major technical resistance with the key US inflation data (CPI) on tap next week- watch the close and look for the breakout to offer further guidance 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