Euro Technical Forecast: EUR/USD Starts to Slip

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro rallies sharply off yearly low to multi-month highs- rally exhausts ahead of key resistance
• EUR/USD advance may be vulnerable into key inflation data / June open.
• Resistance ~1.09, 1.0933/42 (key), 1.1038– Support 1.0777, 1.0641/77, 1.0587/96 (key)

Euro rallied nearly 2.8% off the yearly lows registered in April with EUR/USD exhausting just ahead of major resistance for the past few weeks. The focus now shifts to the June open with the multi-week advance vulnerable here at multi-month highs ahead of the ECB rate decision. 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 my last Euro Technical Forecast we noted to be, “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.” EUR/USD ripped higher the following week with price registering an intraweek high at 1.0895 before exhausting into the October trendline (former slope support in red).

The April recovery may be vulnerable heading into the June open while below the highlighted trendline confluence near the 1.09-handle with key weekly resistance steady at 1.0933/42- a region define by the 61.8% Fibonacci retracement of the December decline and the 2024 high-week close (HWC). A topside breach / close above this threshold is needed to suggest a larger trend reversal is underway with such a scenario exposing subsequent resistance objectives at the December HWC / 2024 yearly open at 1.1038 and the 2023 HWC at 1.1108.

Initial weekly support rests with the February low-week close at 1.0777 and is backed by the yearly low-close / LWC at 1.0641/77- losses should be limited to this region IF price is heading higher on this stretch. Ultimately, a break / close below the 2023 LWC / 78.6% retracement at 1.0587/96 is needed to mark downtrend resumption.

Bottom line: The Euro rally has extended nearly 2.8% off the yearly low with price straddling the 52-week moving average, just below resistance for the past three-weeks. From a trading standpoint, the threat remains for topside exhaustion while below 1.0942 heading into the June open- losses would need to be limited to 1.0641 for the October consolidation structure to remain viable – ultimately the focus remains on a breakout of this 300pip range.

Keep in mind we get the release of key inflation data tomorrow with US Core PCE on tap into the close of the month and the European Central Bank (ECB) interest rate decision next week. Stay nimble into the monthly cross and watch the weekly closes here for guidance. 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