Euro Technical Outlook: EUR/USD Short-term Trade Levels
- Euro rally fails after brief stint above resistance- price contracting within rising wedge pattern
- EUR/USD weekly range intact- breakout imminent with ECB rate decision / US CPI on tap
- Resistance 1.1717/36, 1.1787-1.1805 (key), 1.1917- Support 1.1687, 1.1632, 1.1573
The Euro failed to secure a breakout earlier this week, leaving EUR/USD rangebound just below resistance. With the weekly structure preserved, traders now look to the ECB rate decision and U.S. CPI release for a catalyst to drive the next move. Battle lines 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 had, “exhausted into multi-week downtrend resistance with the weekly range intact just below- the immediate focus is on a breakout of 1.16-1.1726. From a trading standpoint, the monthly advance remains vulnerable while below today’s high - losses would need to be limited to 1.1460 IF price is heading higher on this stretch with a close above 1.18 ultimately needed to fuel the next leg of the advance.”
Euro turned sharply lower that day but defended the 1.16-handle into the close of August- the subsequent attempt to breach resistance failed yesterday before marking an outside-day reversal and the breakout is now in question heading into tomorrow’s ECB rate decision and CPI print. The weekly range is set just above monthly-open support an we are looking for a potential breakout into the close of the week.
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 a rising wedge formation with the recent rally failing to breach the upper parallel early in the week. Initial resistance is now eyed back at 1.1717/36- a region define by the objective weekly open, the August high-day close (HDC), and the 78.6% retracement of the July decline. Ultimately, a breach / close above the July open / 2025 HDC at 1.1787-1.1805 is needed to fuel the next major leg of the rally towards the 100% extension of the 2022 advance at 1.1917.
Monthly open support now converges on the August trendline at 1.1687- a break / close below this slope would suggest a more significant, near-term high is in place / a larger correction is underway. Subsequent support seen at the 38.2% retracement of the August rally at 1.1632 and the April high at 1.1573. Losses should be limited to the 61.8% retracement at 1.1540 for the August rally to remain viable.
Bottom line: EUR/USD is coiling within the weekly opening-range, just below resistance- the immediate focus is on a breakout for guidance. From a trading standpoint, losses should be limited to the August trendline IF price is heading higher on this stretch with a close above 1.1805 ultimately needed to mark resumption of the broader uptrend.
Keep in mind we get the release of the European Central Bank interest rate decision and the U.S. Consumer Price Index (CPI) tomorrow. The ECB is widely expected to hold rates at 2.15% and traders will be largely focused on the inflation print tomorrow ahead of the FOMC next week. Stay nimble into the releases and watch the weekly close 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, Sr Technical Strategist
Follow Michael on Twitter @MBForex
