Euro Technical Outlook: EUR/USD Short-term Trade Levels
- EUR/USD breakout extends eight-day rally to seven-week highs before stalling at confluent resistance
- Threat for near-term inflection within multi-week uptrend
- Focus shifts to whether price pulls back to reset momentum or consolidates for another push higher
- Resistance 1.1679, 1.17, 1.1730/47 (key)- Support 1.1634/45, 1.1589-1.16, 1.1575 (key)
Euro is set to snap an eight-day rally with EUR/USD stalling into uptrend resistance today. The advance carried the pair to seven-week highs, but building momentum divergence now puts the focus on whether price will pull back to reset or consolidate for another breakout attempt. While the broader structure remains constructive, the near-term outlook hinges on the reaction off this resistance zone into the start of the month. Battle lines are drawn on the Euro short-term technical charts.
Euro Price Chart – EUR/USD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Technical Outlook: In last month’s Euro Short-term Technical Outlook we noted that EUR/USD was, “threatening downside exhaustion here and the risk remains for a larger recovery within the multi-month downtrend. From a trading standpoint, the immediate focus is on a breakout of the weekly opening-range for guidance.” That ended up being the monthly low in EUR/USD with re-test and rebound off support last week now extending nearly 1.9% off the November low. The rally cleared the September downtrend into the start of week with the advance marking an eight-day rally yesterday to seven-week highs. The bulls exhausted into confluent resistance today at the 100% extension of the November advance at 1.1679 and the near-term focus is on possible inflection off 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 an ascending channel extending off the late-November low with Euro breaking out of the weekly opening-range yesterday. Near-term momentum divergence suggests the immediate advance may be vulnerable here, but the outlook remains constructive while within this formation.
Initial support now rests at 1.1634/45- a region defined by the November high-day close (HDC), the 38.2% retracement of the September decline, and the 9/25 swing low. Ultimately a break below this channel would be needed to suggest a more significant high is in place with subsequent support seen at the weekly low / 38.2% retracement of the November advance at 1.1590-1.16 and the 50% retracement at 1.1575. Note that the October trendline (former channel resistance) converges on this level next week and losses below this slope would threaten resumption of the broader downtrend (bullish invalidation).
A topside breach here exposes the 1.17-handle, with the next major technical consideration eyed at the October HDC and the 61.8% retracement of the decline off the yearly high at 1.1730/47. Look for a larger reaction there IF reached.
Bottom line: The Euro breakout has extended into near-term uptrend resistance and may be vulnerable to a pullback within the multi-week uptrend. From a trading standpoint, losses should be limited to channel support IF price is heading higher on this stretch with a close above 1.1679 needed to fuel the next leg of the advance.
Keep in mind we get the release of Eurozone GDP data and the September Core Personal Consumption Expenditures (PCE) tomorrow with the Federal Reserve interest rate decision on tap next week. Stay nimble into the releases and watch the weekly closes here for guidance. Review my latest Euro Weekly Technical Forecast for a closer look at the longer-term EUR/USD trade levels.
Key EUR/USD Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on Twitter @MBForex
