Euro Short-term Outlook: EUR/USD Slips Toward Trend Support

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

• Euro rally falters into 2016 highs- pullback testing initial support at former resistance
• EUR/USD remains constructive while above April trendline- Fed testimony, Core PCE on tap
• Resistance 1.1560/85, 1.1616 (key), 1.1680s- Support 1.1455, 1.1415 (key), 1.1347

The Euro rally exhausted just ahead of uptrend resistance last week with EUR/USD bulls attempting to re-assert the April uptrend on the heels of the Fed rate decision. 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 EUR/USD had “major resistance hurdle with the weekly / monthly opening-ranges taking shape just below- look for the breakout. From a trading standpoint, losses would need to be limited to 1.1214 IF price is heading higher on this stretch with a close above the yearly high needed to mark resumption of the broader uptrend.” Euro briefly registered an intraday low at 1.1371 two-days later before ripping higher with the advance faltering last week into the 2016 swing high at 1.1616 (high registered at 1.1631). Euro plunged nearly 1.6% from the highs with price rebounding this week at former resistance at the 1.618% extension of the May advance. While the risk remains for a deeper correction towards the April uptrend, we’re looking for signs of support / that a low is in.  

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 channel with price rebounding off confluent support at the lower parallel yesterday. The immediate focus is on this recovery with initial resistance eyed at the 61.8% retracement of the recent decline / the high-day close (HDC) at 1.1560/85. Ultimately, a breach / close above the 2016 high would be needed to mark uptrend resumption towards the upper parallel (currently near 1.1680s) and the August 2015 high / 78.6% retracement of the 2021 decline at 1.1714/47- both regions of interest for possible top-side exhaustion / price inflection IF reached.

Initial support rests at 1.1455 and is backed by the 38.2% retracement of the May advance at 1.1415. Note that the April trendline converges on this threshold mid-week and a break / close below this slope would be needed to suggest a more significant high weas registered las week / a larger trend correction is underway. Subsequent support rests with the objective monthly open at 1.1347 and the 2023 high / 61.8% retracement at 1.1276/82- look for a larger reaction there IF reached.

Bottom line: The Euro rally remains vulnerable to a test of uptrend support while below 1.1585. From a trading standpoint, losses would need to be limited to the April trendline IF price is heading higher on this stretch with a close above 1.1616 needed to mark uptrend resumption.

Keep in mind Federal Reserve Chairman Powell is slated for two-days of congressional testimony next week with Core Personal Consumption Expenditures (the Fed’s preferred inflation gauge) on tap Friday. 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.

Active Short-term Technical Charts

• Canadian Dollar Short-term Outlook: USD/CAD Rips Toward Resistance
• Swiss Franc Short-term Outlook: USD/CHF Support Intact Ahead of Fed, SNB
• Japanese Yen Short-term Outlook: USD/JPY Breakout Looms Ahead of Fed
• Gold Short-term Outlook: XAU/USD Breaks Out- Bulls Eye Record High
• US Dollar Short-term Outlook: USD Holds Key Support Before NFPs
• British Pound Short-term Outlook: GBP/USD Bulls Eye Breakout
• Australian Dollar Short-term Outlook: AUD/USD Poised for Breakout

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