Euro Technical Forecast: EUR/USD Threatens Correction

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro snaps four-week rally to fresh yearly highs- threatens deeper bull-market correction
• EUR/USD September opening-range taking shape above yearly-open support- NFP on tap
• Resistance 1.1108, 1.1228/74 (key), 1.1497-1.1523– Support 1.1038, 1.0942 (key), 1.0801/19

Euro snapped a four-week winning streak last week with EUR/USD turning from fresh yearly highs. The focus is on this correction within the broader uptrend with the bulls vulnerable near-term while below the last week’s highs. 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 had failed to close above a key pivot zone and that, “losses should be limited to 1.08 IF price is heading for a breakout on this stretch with a close above 1.0942 needed to fuel the next leg in price.” Euro broke higher the following week with a two-week rally extending more than 2.6% to fresh yearly highs.

The rally exhausted into channel resistance (red) last week with Euro marking a 1.4% reversal off the highs- that decline is testing initial support into the start of the month at December high-week close (HWC) / 2024 yearly open at 1.1038- looking for possible price inflection off this mark.

A pivot below this level would threaten a deeper correction toward the January HWC at 1.0942- we’ll reserve this threshold as our medium-term bullish invalidation level. A close below the channel would suggest that a more significant high was registered last week and risk a test of the 52-week moving average, currently near the June HWC at 1.0801/19.

Initial resistance is eyed with the 2023 HWC at 1.1108 and is backed by a key technical confluence at 1.1228/75- a region defined by the 2023 high close and the 61.8% Fibonacci retracement of the 2021 decline. A breach / weekly close above this threshold is needed to mark uptrend resumption and fuel the next leg in price towards the 2020 March highs / 61.8% extension of the 2022 advance at 1.1497-1.1523.

Bottom line: A four-week rally to fresh yearly highs exhausted into channel resistance last week 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.

Keep in mind the monthly opening-range is taking shape just above this support zone- look for the breakout to offer guidance in the days ahead. US Non-Farm Payrolls are on tap tomorrow- stay nimble into the release and watch the weekly closes 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