Euro Short-term Outlook: EUR/USD Breakout Hits Resistance- Bulls Eye Reset Ahead

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

EUR/USD breakout extends eight-day rally to seven-week highs before stalling at confluent resistance
Threat for near-term inflection within multi-week uptrend
Focus shifts to whether price pulls back to reset momentum or consolidates for another push higher
Resistance 1.1679, 1.17, 1.1730/47 (key)- Support 1.1634/45, 1.1589-1.16, 1.1575 (key)

Euro is set to snap an eight-day rally with EUR/USD stalling into uptrend resistance today. The advance carried the pair to seven-week highs, but building momentum divergence now puts the focus on whether price will pull back to reset or consolidate for another breakout attempt. While the broader structure remains constructive, the near-term outlook hinges on the reaction off this resistance zone into the start of the month. Battle lines are drawn on the Euro short-term technical charts.

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

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, “threatening downside exhaustion here and the risk remains for a larger recovery within the multi-month downtrend. From a trading standpoint, the immediate focus is on a breakout of the weekly opening-range for guidance.” That ended up being the monthly low in EUR/USD with re-test and rebound off support last week now extending nearly 1.9% off the November low. The rally cleared the September downtrend into the start of week with the advance marking an eight-day rally yesterday to seven-week highs. The bulls exhausted into confluent resistance today at the 100% extension of the November advance at 1.1679 and the near-term focus is on possible inflection off this threshold.

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 an ascending channel extending off the late-November low with Euro breaking out of the weekly opening-range yesterday. Near-term momentum divergence suggests the immediate advance may be vulnerable here, but the outlook remains constructive while within this formation.

Initial support now rests at 1.1634/45- a region defined by the November high-day close (HDC), the 38.2% retracement of the September decline, and the 9/25 swing low. Ultimately a break below this channel would be needed to suggest a more significant high is in place with subsequent support seen at the weekly low / 38.2% retracement of the November advance at 1.1590-1.16 and the 50% retracement at 1.1575. Note that the October trendline (former channel resistance) converges on this level next week and losses below this slope would threaten resumption of the broader downtrend (bullish invalidation).

A topside breach here exposes the 1.17-handle, with the next major technical consideration eyed at the October HDC and the 61.8% retracement of the decline off the yearly high at 1.1730/47. Look for a larger reaction there IF reached.

Bottom line: The Euro breakout has extended into near-term uptrend resistance and may be vulnerable to a pullback within the multi-week uptrend. From a trading standpoint, losses should be limited to channel support IF price is heading higher on this stretch with a close above 1.1679 needed to fuel the next leg of the advance.

Keep in mind we get the release of Eurozone GDP data and the September Core Personal Consumption Expenditures (PCE) tomorrow with the Federal Reserve interest rate decision on tap next week. Stay nimble into the releases and watch the weekly closes 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

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on Twitter @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of StoneX Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor