Euro technical forecast: EUR/USD plunge targets trend support

Euro technical forecast: EUR/USD weekly trade levels

• Euro reverse sharply off confluent resistance at the yearly open
• EUR/USD at risk for deeper correction within the multi-month uptrend
• Resistance 1.0704, 1.0793-1.0839, 1.1033– support 1.0412/61, 1.0352 (key), 1.0108

Euro plunged more than 1.8% off the weekly highs with EUR/USD reversing sharply off confluent resistance at the yearly open. While the broader outlook is still technically constructive, the threat of a deeper correction within the broader advance remains while below the 1.07-handle. These are the updated targets and invalidation levels that matter on the EUR/USD weekly technical chart heading into tomorrow’s European Central Bank (ECB) interest rate decision.

Discussing this Euro setup and more in the Weekly Strategy Webinars on Monday’s at 8:30am EST.

Euro Price Chart – EUR/USD Weekly

Technical Outlook: In last month’s Euro technical forecast, we noted that EUR/USD was attempting to break below the objective yearly open at 1.0705- “A break / weekly close below this threshold would threaten a larger correction within the confines of the September uptrend…” Price broke below this threshold the following week with a Euro retesting this zone as resistance for the past four-weeks with a final rejection today risking a test of uptrend support.

Key weekly support rests at 1.0412/61- a region defined by the 52-week moving average and the 38.2% Fibonacci retracement of the September. Ultimately, a break / weekly close below the 2016 low at 1.0352 would be needed to validate a break of the multi-month uptrend in EUR/USD.

Initial resistance remains with the yearly open with a breach / close above the yearly high-week close / 61.8% retracement at 1.0792-1.0838 needed to mark resumption of the uptrend towards 1.1033.

Bottom line: Euro has failed an attempt to mount yearly-open resistance and threatens a deeper pullback in the days ahead. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards the 1.04-handle – rallies should be limited to 1.07 IF price is heading lower. I’ll publish an updated Euro short-term technical 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 Twitter @MBForex