Euro Short-term Outlook: EUR/USD Yearly-Open Support Pivot in Play

Euro Technical Outlook: EUR/USD Short-term Trade Levels

• Euro plummets more than 3.4% off technical resistance at the yearly highs
• EUR/USD sell-off now testing key support-pivot around 2023 yearly-open
• Resistance ~1.08, 1.0842, 1.0909- support 1.0705/17 (key), 1.0614, 1.0515

Euro plunged for a third consecutive week with the EUR/USD now testing 2023 yearly-open support. While a break below a multi-month uptrend keeps the focus lower, the decline is now testing a key pivot zone and we’re looking for possible price inflection in the days ahead for guidance. These are the updated targets and invalidation levels that matter on the EUR/USD short-term technical charts heading into the May close.

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Euro Price Chart – EUR/USD Daily

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

Technical Outlook: In my last Euro Short-term Technical Outlook we noted that the EUR/USD, “rally was halted at resistance for a third time with the ECB interest rate decision on tap tomorrow. From a trading standpoint, I’m looking for a more meaningful inflection off this resistance zone with either a final failed attempt, or a break below uptrend support to threaten a larger pullback.” A final attempt failed the following day before reversing lower with a break of uptrend support early in the month fueling a decline of nearly 3.5% off the highs.

The decline is now testing a major support confluence at 1.0705/17- a region defined by the objective yearly open and the 61.8% Fibonacci retracement of the yearly range. Looking for possible price inflection into this threshold.

Euro Price Chart – EUR/USD 240min

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

Notes: A closer look at Euro price action shows EUR/USD trading within the confines of a descending pitchfork formation extending off the yearly highs with the median-line further highlighting immediate support at 1.0705/17.

Initial resistance is eyed with the upper parallel (currently ~1.08) with near-term bearish invalidation now lowered to the April open at 1.0842. Ultimately, a breach through the February high-day close at 1.0909 would be needed to mark resumption of the broader uptrend.

A break below this key support zone would threaten another accelerated decline towards the 78.6% retracement at 1.0614 and the yearly low- close at 1.0515. Critical support rests with the 200-day moving average / yearly opening-range low at 1.0482-1.0515- look for a larger reaction there IF reached.

Bottom line: The Euro plunge is now testing the first major support hurdle around the objective yearly open. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to 1.0842 IF price is heading lower on this stretch. Review my latest Euro weekly technical forecast for a closer look at the longer-term EUR/USD trade levels.

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

Follow Michael on Twitter @MBForex