Euro Technical Forecast: EUR/USD Breaks Key Averages—Downtrend Risk Builds
EUR/USD reversed sharply off major resistance this week with a break of the May range accelerating. Bears threaten to resume the broader downtrend.
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Euro Technical Forecast: EUR/USD Weekly Trade Levels
- EUR/USD has broken below the 52-week and 200-day moving averages after reversing from major resistance.
- Break of the May range is accelerating as downside momentum builds within the broader downtrend structure.
- Initial support now in view- a break below would threaten continuation of the yearly decline.
- Recovery attempts are likely to face resistance while below the yearly open.
- Resistance 1.1746/75 (key), 1.1849, 1.1917- Support 1.1578/98 (key), 1.1483, 1.1355/94
EUR/USD is under renewed pressure after failing once again at major resistance, with a weekly reversal of more than 1.4% now breaking below key moving averages. The reversal shifts the near-term focus back to the downside, with price now approaching a key pivot zone near the 1.16-handle. While the risk remains weighted to the downside following the rejection from the April highs, the immediate decline may be vulnerable into this key support, and a reaction here may determine the next move. Battle lines drawn on the EUR/USD weekly technical chart.
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 Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Technical Outlook: In my last Euro Technical Forecast we noted that EUR/USD was, “trading just below a key pivot zone around the yearly open for a fourth-consecutive week. The focus is on a reaction off this region early in the month with the March rally vulnerable while below. From a trading standpoint, losses should be limited to the 52-week moving average IF price is heading for a breakout on this stretch..” A fifth attempt the following week failed to sustain a break with Euro reversing sharply to break the monthly opening range lows on Friday. The losses amount to decline of more than 1.9% off the April highs with a break below the 52-week & 200-day moving averages threatening further losses in the weeks ahead.
Initial support is now in view just lower at the 61.8% retracement of the 2025 advance and the January close low at 1.1578/98. Just below this level rests the median-line of the pitchfork we have been tracking off the yearly high- losses below this slope would threaten resumption of the yearly downtrend with the next major technical considerations seen at the 1.618% extension of the April decline at 1.1483 and key support at the 1.1355/94- a region defined by the 38.2% retracement of the 2025 advance, the April high close, and July swing low.
Key resistance remains with the yearly open, the 2025 high-week close (HWC), and the 2025 high-close at 1.1746/75. Note that the 61.8% parallel converges on this zone over the next few weeks and a breach / weekly close above would be needed to suggest a more significant low is in place. Ultimately, a breach above upper parallel / April high at 1.1849 would invalidate the yearly downtrend with subsequent resistance objectives eyed at the 100% extension of the 2022 advance / the 2025 swing high at 1.1917/19 and the 38.2% retracement of broader the 2008 decline at 1.2020.
Bottom line: EUR/USD has responded to key resistance at the yearly open with the reversal now approaching initial support. From a trading standpoint, rallies would need to be limited to the yearly open IF price is heading lower on this stretch with a close below 1.1578 needed to fuel the next major leg of the decline.
Keep in mind the economic calendar is rather light next week with Eurozone PMI data headlining the docket. Stay nimble into these lows and watch the weekly closes for guidance. Review my latest Euro Short-term Outlook for a closer look at the near-term EUR/USD technical trade levels.
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--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
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