Euro Technical Forecast: EUR/USD Post-Fed Rally Stalls

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro pares post-Fed rally- EUR/USD up just 0.4% this week despite range of nearly 1.1%
• EUR/USD threat for deeper bull-market correction- September opening-range intact
• Resistance 1.1108, 1.1228/74 (key), 1.1497-1.1523– Support 1.1038, 1.0942/72 (key), 1.0830/36

Euro is trading just below the yearly highs against the US Dollar with EUR/USD paring more than half of the weekly advance on the heels of yesterday’s Fed rate cut. The June rally remains vulnerable here with the September opening-range largely intact into the close of the week. 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 a four-week rally in EUR/USD had turned from channel resistance and, “while the broader outlook remains constructive, the advance may be vulnerable early in the month. Form a trading standpoint, losses should be limited to 1.0942 IF price is heading higher on this stretch with a close above 1.1274 ultimately needed to fuel the next major leg in price.”

Euro fell nearly 1.8% off the highs with price registering an intraweek low at 1.1002 last week before rebounding. For three-weeks EUR/USD was unable to mark a close below the objective yearly-open at 1.1038 with the recovery now within striking distance of the yearly highs near 1.12 on the heels of yesterday’s Fed rate decision.

A critical resistance confluence is eyed just higher at 1.1228/75- a region defined by the 2023 high close and the 61.8% Fibonacci retracement of the 2021 decline. Note that there are numerous slope considerations that converge on this pivot zone over the next few weeks and further highlight the technical significance of this region. A breach / weekly close above this threshold is needed to mark uptrend resumption and would threaten another accelerated breakout towards the highlighted slope confluence near ~1.1375. The next major resistance zone is eyed at the 2020 March highs / 61.8% extension of the 2022 advance around 1.1497-1.1523- look for a larger reaction there IF reached.

Initial weekly support remains with the December high-week close (HWC) / 2024 objective yearly-open at 1.1038 and is backed by near-term bullish invalidation at 1.0942/72- a region defined by the January HWC and the 38.2% retracement of the yearly range. A break / close below this threshold would invalidate the June advance and shift the focus back towards the 61.8% retracement / 52-week moving average at 1.0830/36.

Bottom line: Although the Euro technical outlook remains constructive, the immediate advance may be vulnerable into key resistance just higher. Risk for a deeper pullback within the uptrend- be on the lookout for signs of downside exhaustion in the weeks ahead. From a trading standpoint, losses would need to be limited to the June slope / 1.0942 IF price is heading higher on this stretch with a close above 1.1275 ultimately needed to mark uptrend resumption.

Keep in mind the September opening-range remains intact just above the yearly open heading into the close of the week (1.1026-1.1155)- mind the weekly closes and look for the breakout to offer further guidance here. Review my latest Euro Short-term Outlook for a closer look at 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