Euro Technical Forecast: EUR/USD Bulls Eye First Major Test

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro attempting fourth-consecutive weekly rally- up more 2% off April / yearly low
• EUR/USD advance testing key resistance at yearly downtrend- risk for exhaustion / price inflection
• Resistance 1.0806/19, 1.0933/42, 1.1038– Support 1.0677, 1.0587/96, 1.0448

Euro surged 2% off the yearly lows registered last month with EUR/USD attempting to mark a fourth-consecutive rally this week. The advance is approaching the first major test of resistance into the May opening-range and the focus is on possible topside exhaustion / price inflection into this key threshold. These are the updated targets and invalidation levels that matter on the EUR/USD weekly technical chart.

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Euro Price Chart – EUR/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Technical Outlook: In last month’s Euro Technical Forecast we noted that EUR/USD was attempting to break uptrend support and that , “rallies should be limited to the yearly moving average IF price is heading lower on this stretch with a close below 1.07 needed to fuel the next leg in price.” EUR/USD failed to breach / mark a close above the 52-week moving average for the following two-weeks before finally reversing sharply lower with price registering an intraday low at 1.0601 before rebounding.

Euro is attempting a fourth-consecutive advance this week with the rally now approaching technical resistance at the December downtrend. The level in focus is 1.0806/19- a region defined by the 38.2% Fibonacci retracement of the December sell-off, the 52-week moving average, and basic trendline resistance. A breach / weekly-close above this threshold is needed to suggest a more significant low was registered last month. Ultimately, a close above the yearly high-week close (HWC) / 61.8% retracement at 1.0933/42 would be needed to validate a larger breakout towards the objective yearly open / December HWC at 1.1038.

Initial weekly support now rests with the yearly low-week close (LWC) at 1.0677 and is backed by key support at the 2023 LWC / 78.6% retracement of the 2023 rally at 1.0587/96- look for a larger reaction there IF reached with a break / weekly close below needed to mark resumption towards the 2023 lows at 1.0448.

Bottom line: The Euro rally is approaching a major resistance hurdle and the first real test for the bulls. We’re on the lookout for a possible exhaustion high in the days ahead. From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch towards 1.08- the bulls would need to defend support at the LWC (1.0677) for the April rally to remain viable- look for a larger reaction there IF reached.

Keep in mind we are in the early throws of the May opening-range, and we’ll be looking for the breakout to offer further conviction on our directional bias into the close of the month. Although the economic docket is light this week, there are a slew of Fed speakers on tap- stay nimble early in the month and watch the weekly close for guidance here. I’ll publish an updated Euro Short-term Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex