Euro Short-term Outlook: EUR/USD Rejected at Trend Resistance
Euro Technical Outlook: EUR/USD Short-term Trade Levels
- Euro reverses off multi-year uptrend resistance- monthly opening-range takes shape
- EUR/USD threat for bull-market correction while below weekly open- CPI on tap
- Resistance 1.1748, 1.1775 (key), ~1.1830s - Support 1.1609/16, 1.1573 (key), 1.1440
The Euro rally exhausted into uptrend resistance into the start of the month with EUR/USD threatening to snap a two-week winning streak at fresh yearly highs. The immediate focus is on this pullback with initial support now in view. Battle lines drawn on the Euro short-term technical charts.
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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 was, “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.” Euro rebounded just ahead of the April trendline days later with a break through 1.1616 on June 25fueling an advance into multi-year uptrend resistance into the start of July. Euro is now off more than 1% from the high and the near-term threat for a larger correction remains below the weekly open at 1.1775.
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 descending channel extending off the yearly highs. A break below the weekly opening-range today threatens further declines within this formation with initial support objective seen at the 1.618% extension / 2016 high at 1.1609/16 and the April high at 1.1573. Note that the April trendline converges on this threshold next week and a break / close below this slope would be needed to suggest a more significant high was registered last week / a larger reversal is underway- look for a larger reaction there IF reached. Subsequent support rests with the 23.6% retracement of the yearly range at 1.1440.
Initial resistance is eyed with the 78.6% retracement of the 2021 decline at 1.1748 and is backed closely by the objective weekly / monthly open at 1.1775/87- we’ll reserve this threshold as our bearish invalidation levels with a breach above the upper parallel (currently near ~1.1830s) ultimately needed to mark uptrend resumption. Subsequent resistance eyed at the 100% extension of the 2022 advance at 1.1917 and the 1.618% extension of the January rally at 1.1990.
Bottom line: A reversal off uptrend resistance into the monthly open threatens a larger correction here in EUR/USD. From a trading standpoint, losses should be limited to 1.1573 IF price is heading higher on this stretch with a close above the upper parallel needed to fuel the next major leg of the advance.
Keep in mind we get the release of key U.S. inflation data next week with the Consumer Price Index (CPI) on tap Tuesday. 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
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