Euro Technical Forecast: EUR/USD Plunge, Turn or Burn Ahead of NFP

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro reversal off confluent resistance attempting third consecutive weekly decline
• EUR/USD signaling possible false breakout of 2023 opening-range, support in view
• Resistance 1.1033-1.1108 (key), 1.1275, 1.1375– support 1.0850, 1.0667-1.0705, ~1.0561

Euro is poised to mark a three-week sell-off with EUR/USD plunging more than 3% from the yearly high. A reversal off confluent resistance last month now threatens a larger correction towards uptrend support and the battle lines are drawn into NFPs tomorrow. 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, Technical Strategist; EUR/USD on TradingView

Technical Outlook: In last month’s Euro Technical Forecast, our focus was on possible price inflection into 1.1033/70- a region defined by the January range highs, the 2023 high-week close, and the 23.6% retracement of the broader 2008 decline. We noted a constructive outlook while above 1.0850 with “A breach / close above this threshold needed to fuel the next leg in price towards subsequent resistance objectives at the upper bounds of this yearly rising wedge formation near ~1.1148 and the key 61.8% Fibonacci retracement of the 2021 decline at 1.1275.”

Euro ripped higher the following week with EUR/USD registering an intraday high at 1.1275 before turning sharply lower. Price has now plunged more than 3.2% off those highs with decline nearly taking back the entire July advance. The speed and magnitude of the recent move may be signaling a false breakout of the yearly opening-range – so was a more significant high registered last month?

Initial weekly support now rests back at the May weekly-reversal close at 1.0850 backed closely by the 61.8% retracement of the yearly range at 1.0785 and the March channel line. Ultimately, a break / close below 2023 low week close / objective yearly open at 1.0667-1.0705 (bullish invalidation) would be needed to suggest a larger trend reversal is underway towards the 52-week moving average at ~1.0561.

Weekly resistance now extends to include the yearly high-week close at 1.1033-1.1108.  A breach / close above this threshold would be needed to mark uptrend resumption back towards key resistance 1.1275- look for a larger reaction there again IF reached. Subsequent resistance objectives eyed at the 2022 yearly open at 1.1375 and the March 2020 high pivot-zone near 1.1497.

Bottom line: Euro has turned from confluent resistance at the top of the yearly uptrend. From a trading standpoint, losses should be limited to 1.0785 IF price is heading higher with a breach / close above 1.1108 needed to fuel another test of the highs. Keep in mind US non-farm payrolls are on tap Friday with key inflation data slated for next week- stay nimble here and watch the weekly closes. 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