Euro Short-term Outlook: EUR/USD Poised for Breakout Ahead of Fed

Euro Technical Outlook: EUR/USD Short-term Trade Levels

• Euro slides 2.65% off yearly highs- coils just above multi-month uptrend support
• EUR/USD near-term breakout imminent- Federal Reserve interest rate decision on tap
• Resistance 1.1420, 1.1510/14 (key), 1.16- Support 1.1275, 1.1214, 1.1160 (key)

Euro is steady ahead of today’s highly anticipated interest rate decision with the EUR/USD pullback coiled just above multi-month trend support. While the broader outlook is still constructive, the threat remains for a larger correction while below the 1.14-handle and the immediate focus is on a breakout of the weekly opening-range for guidance. Battle lines drawn on the Euro short-term technical charts heading into Fed.

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, “while the broader outlook remains constructive, the advance may be vulnerable near-term while below trend resistance… losses would need to be limited by 1.1160 IF Euro is heading higher on this stretch with a close above 1.1514 needed to fuel the next leg of the advance.” EUR/USD extended more than 2.6% off the highs with tight monthly & weekly opening-ranges preserved heading into today’s FOMC rate decision. The focus is on a breakout of the 1.1275-1.1420 range.

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 continuing to trade within the confines of the descending pitchfork we’ve been tracking off the monthly highs. Initial support rests with the 2023 swing high at 1.1275 backed by the 2024 high at 1.1214. Ultimately, a break / close below the 100% extension at 1.1160 would be needed to suggest a more significant high was registered last month / a larger trend reversal is underway towards 1.1040.

Initial resistance is eyed with the upper parallel / 50% retracement at 1.1420 with critical resistance unchanged at the 100% extension / yearly high-day close (HDC) at 1.1510/14- a break / close above this threshold is needed to mark uptrend resumption with subsequent objectives eyed at the 1.16-handle and the 78.6% retracement of the 2021 decline at 1.1747- look for a larger reaction there IF reached.

Bottom line: A reversal off uptrend resistance is now coiled just above trend support and the immediate focus is on a breakout into the close of the week. From at trading standpoint, any losses would need to be limited to 1.1160 for the February rally to remain viable with a close above 1.1514 needed to mark resumption.

The Federal Reserve interest rate decision is on tap at 2pm EST today with Chair Powell slated to speak thirty minutes later- 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.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex