Euro Technical Forecast: EUR/USD Weekly Trade Levels
- EUR/USD has rebounded off downtrend support after a sharp selloff- up nearly 0.8% off the monthly low.
- Euro is now testing resistance at a key technical barrier that has triggered major price inflections throughout the year.
- A rejection here would reinforce the broader downtrend while a sustained break would ease immediate downside pressure and threaten a larger recovery.
- Major event risk on next week with the Fed rate decision on tap
- Resistance 1.1578/98, ~1.1671/77 (key), 1.1745/75- Support 1.1483 (key), 1.1355/94, 1.1110/63
EUR/USD is rebounding after finding support at the lower bounds of the April downtrend, but the recovery is now running into a pivotal resistance zone defined by former support. This area represents the first major hurdle for the rebound and could prove decisive for the near-term outlook. With the broader downtrend still intact and the FOMC decision on tap next week, the focus is on whether sellers reassert control at resistance or if buyers can force a larger recovery.. Battle lines drawn on the EUR/USD weekly technical chart.
Euro Price Chart – EUR/USD Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Technical Outlook: In last month’s Euro Technical Forecast we noted that EUR/USD had rebounded from pivotal support and into the close of May and that, “From a trading standpoint, rallies would need to be limited to the yearly open IF price is heading lower on this stretch with a close below 1.1578 still needed to mark resumption of the broader downtrend.” Euro turned lower the following week with a break below support extending more than 2.5% off the May high before rebounding off the median line this week.
The recovery takes Euro back into resistance at former support around 1.1578/98- a region defined by the 61.8% retracement of the March rally, the May low, and the January close low. The focus heading into next week is on a reaction off this zone. Subsequent resistance is eyed with the 52-week and 200-day moving averages near ~1.1671/76 with broader bearish invalidation steady at the yearly open and the 2025 high-week close / high close at 1.1746/75.
Initial weekly support now rests with the 1.618% extension of the April decline at 1.1483. Note that the median line converges on this threshold over the next few weeks and a break / close below this slope is needed to fuel the next major leg of the decline. The next major technical consideration rests at 1.1355/94- a region defined by the 38.2% retracement of the 2025 advance, the April high close, and the July swing low. Look for a larger reaction there IF reached.
Bottom line: A rebound off downtrend support is now approaching pivotal resistance and the focus is on possible inflection off this mark next week. From a trading standpoint, rallies would need to be limited to the 52-week moving average IF price is heading lower on this stretch with a close below 1.1483 needed to fuel the next leg of the decline.
Keep in mind the FOMC rate decision is on tap Wednesday with newly minted Fed Chairman Kevin Warsh making his inaugural address to the markets. Traders will be closely eyeing the central bank’s updated Summary of Economic Projections on growth, employment, and most notably, inflation. The focus will be on the Core PCE projections and the interest rate dot plot as traders assess the committee’s willingness to remain on hold amid stubbornly high inflation.
As of now, Fed Fund Futures are pricing a 58% probability the central bank will need to hike at least 25 basis points before the end of the year. This has been a tailwind for the greenback but if the projections or show an optimistic view on inflation or if a lasting resolution is reached with regards to the ongoing conflict in Iran, the U.S. Dollar may come under renewed pressure as rate expectations ease. Review my latest Euro Short-term Outlook for a closer look at the near-term EUR/USD technical trade levels.
Key Euro / US Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
