Euro Short-term Technical Outlook: EUR/USD Tempts Trend Support

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

• Euro plummets 1.78% off yearly high- searching for support within April uptrend
• EUR/USD trying to snap four-day losing streak, trading into 2024 yearly open- Fed on tap
• Resistance 1.1085, 1.1105 (key), 1.1161- Support 1.0972/80, 1.0947(key), 1.0879

The Euro is poised to snap a four-day losing streak with EUR/USD trading into the objective 2024 yearly open on heels of today’s ECB rate decision. Price has plunged nearly 1.8% off the yearly highs with a reversal off uptrend resistance now searching for support. Battle lines drawn on the EUR/USD short-term technical charts ahead of the Fed.  

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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 a reversal off uptrend resistance in EUR/USD was testing the August support slope. We cited that the, “immediate focus is on this pivot zone near the December high-close at 1.1105 and although broader outlook remains constructive, weakness below this threshold could fuel a deeper pullback within the multi-month uptrend.”

Euro broke lower the following day with price plunging more than 1.4% into the close of the month. The September opening-range low was set just above the objective yearly open at 1.1038 and while break lower on Monday does threaten further losses, we are on the lookout for possible downside exhaustion within the broader April uptrend 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 reversing off the upper parallels (blue) with the pullback trading within a broad descending channel formation (red). Initial support rest just lower at the 1.10-handle backed closely by the Fibonacci confluence near 1.0972/80 and the March high-close at 1.0947– both areas of interest for possible downside exhaustion / price inflection IF reached. Ultimately, a break / close below this formation would be needed to suggest a more significant high was registered last month / a larger reversal is underway towards 1.09.

Weekly-open resistance is eyed at 1.1085 and is backed closely by near-term bearish invalidation at the December high-close at 1.1105. Key resistance now lowered to the yearly high-day close (HDC) at 1.1161- a close above this threshold would be needed to mark uptrend resumption towards the yearly highs at 1.12 and the 2023 HDC at 1.1228.

Bottom line: A turn from uptrend resistance takes Euro towards uptrend support and while the near-term threat remains lower, we ‘re on the lookout for an exhaustion low in the days ahead. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards the lower parallels – losses should be limited to 1.0947 IF the June advance is to remain intact with a breach / close above 1.1105 needed to suggest a more significant low is in place.

Keep in mind the FOMC interest rate decision is on tap next Wednesday- stay nimble into the release and watch the weekly close 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