Euro Technical Forecast: EUR/USD Surge Hits Multi-Year Barrier – Inflection Risk Builds

Euro Technical Forecast: EUR/USD Weekly Trade Levels

EUR/USD rally extended more than 4% from the January low with price testing major multi-year trend resistance into the close
While the broader outlook remains constructive, the bulls may be vulnerable into monthly cross and a sustained break through resistance is needed to fuel the next leg of the uptrend.
Major event risk on tap into the monthly open with ECB and NFPs next week
Resistance 1.1917-1.2020 (key), 1.2218, 1.2350 - Support 1.1746/75, 1.1598 (key), 1.1497

EUR/USD surged more than 4% off the January lows with the rally exhausting this week at a major multi-year resistance zone. The immediate focus is on the market’s response at this threshold and while the broader structure remains constructive, a reaction here is likely to shape near-term direction into the start of February trade. Battle lines drawn on the EUR/USD monthly & weekly technical charts

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this EUR/USD technical setup and more. Join live on Monday’s at 8:30am EST.

Euro Price Chart – EUR/USD Monthly

Euro Price Chart – EUR/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Technical Outlook: In my last Euro Technical Forecast we noted that the early-month pullback in EUR/USD was, “approaching confluent uptrend support. From a trading standpoint, the focus is on possible inflection into 1.1598- a reaction there will likely determine if the late-December pullback was simply a correction or whether a larger trend reversal will take shape into the start of the year.” Price registered a close low at 1.1598 days later before rebounding sharply with EUR/USD marking an outside-weekly reversal off the low the following week.

The rally extended more than 4.3% off the January lows before exhausting into a major technical barrier this week at 1.1917-1.2020- a region defined by the 2025 swing high, the 100% extension of the 2022 advance, and the 38.2% retracement of the broader 2008 decline. Note that the upper parallel converges on this threshold over the next few weeks and the focus is on possible inflection off this zone into the start of February. The immediate advance may be vulnerable while below this threshold and a topside breach / weekly close above is ultimately needed to fuel the next major leg of the rally.

Initial weekly support now rests at 1.1746/75- a region define by the objective yearly open, the 2025 high-week close (HWC) and the 2025 high-close. Medium-term bullish invalidation is now raised to the 75% parallel which converges on the January low-close at 1.1598. A break / weekly close below this slope would suggest a more significant high is in place and a larger correction is underway within the 2025 uptrend. Subsequent support rests with the March 220 and the 2022 high at 1.1497 and the April high-close at 1.1394.

A weekly close above this key pivot zone would be needed to mark uptrend resumption and could fuel another bout of accelerated gains for the Euro. Subsequent resistance objectives are eyed at the 2021 HWC at 1.2218 and the 2021 swing high at 1.2350.

Bottom line: The Euro rally exhausted into uptrend resistance this week at key technical barrier- risk for major inflection off this zone into the start of the month. From a trading standpoint, losses would need to be limited to 1.1746 IF price is heading higher on this stretch with a close above 1.2020 needed to fuel the next major leg of the advance.

Keep in mind key event risk is slated into start of February with the European Central Bank (ECB) rate decision and US Non-Farm Payrolls on tap next week. Stay nimble into the monthly cross and watch the weekly closes for guidance here. I’ll publish an updated Euro Short-term Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

Key Euro / US Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.