Euro Technical Outlook: EUR/USD Short-term Trade Levels
- EUR/USD plummets toward critical support post-FOMC- weekly range intact just above
- EUR/USD breakout imminent heading into key U.S. inflation data on Friday
- Resistance 1.1813/30, 1.1866 (key), 1.1917- Support 1.1717/18, 1.1687 (key), 1.1627
The Euro plunged from fresh four-year highs post-Fed with EUR/USD now testing multi-week uptrend support. The weekly opening-range is preserved just above, and the immediate focus is on a breakout in the days ahead with the bulls vulnerable while below the weekly high. 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 my last Euro Short-term Technical Outlook we noted that EUR/USD was poised for a breakout ahead of the Fed and that, “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.” A rebound off the August trendline the following day fueled a rally of more than 2.2% with the post-Fed advance exhausting into technical resistance at the 100% extension of the 2022 rally at 1.1917.
The subsequent reversal plunged more than 1.6% from those highs with EUR/USD testing the August trendline today. The weekly range is set just above with now price poised for a breakout in the days ahead.
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 proposed descending pitchfork extending off the yearly highs with the 75% parallel highlighting near-term support at 1.1717/19- a region defined by the August high-day close (HDC) and the 38.2% retracement of the August advance. A break / daily close below this threshold would validate a break of the weekly range with a break below the objective September open at 1.1687 needed to suggest a more significant high is in place / a larger trend reversal is underway. Subsequent support rests with the 100% extension of the recent decline at 1.1627 and April high / 61.8% retracement at 1.1573/93- look for a larger reaction there IF reached.
Initial resistance is eyed at the yearly high-day close (HDC) / July high at 1.1813/30 and is backed by the yearly high-close at 1.1866. Ultimately, a topside breach / close above pitchfork resistance would be needed to mark resumption of the broader uptrend towards 1.1917 and the 1.618% extension at 1.1990- area of interest for possible topside exhaustion / price inflection IF reached.
Bottom line: A reversal off longer-term uptrend resistance is now testing support at the August trendline with the weekly opening-range preserved just above. Looking for a breakout in the days ahead for guidance. From a trading standpoint, rallies should be limited to the weekly high IF EUR/USD is heading for a break lower on this stretch with a close below 1.1687 needed to fuel the next major leg of the decline.
Keep in mind we get the release of key U.S. inflation data on Friday with the Core Personal Consumption Expenditures on tap. Stay nimble into the release 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
