Euro Technical Forecast: EUR/USD Rally at Risk Below Resistance

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro rallies 2.7% off July low- post-NFP bounce defends yearly uptrend
• EUR/USD bulls remain vulnerable while below 2025 high-close - U.S. CPI on tap
• Resistance 1.1775, ~1.1860s, 1.1917-1.2020 (key)- Support 1.1497, 1.1394, 1.1164/99

Euro posted a sharp rebound off the yearly uptrend last week, with EUR/USD rallying more than 2.7% off the lows following the post-NFP surge. That advance remains vulnerable while below resistance at the high-week close, and the immediate focus is on a breakout of a well-defined price range. Battle lines drawn on the Euro weekly technical chart.

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Euro Price Chart – EUR/USD Weekly

 

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

Technical Outlook: In last month’s Euro Technical Forecast we noted that EUR/USD was, “testing the yearly high-close ahead of the ECB- watch the Friday close with respect to 1.1775. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops…” The rally failed at resistance (intraweek high registered at 1.1789) that week before reversing sharply with EUR/USD plunging 3.7% off the yearly high into the close of July.

Price rebounded off support last week at the April high-close near 1.1394 with the NFP-inspired rally extending nearly 2.5% into the August open. The rebound keeps EUR/USD within the yearly uptrend, for now.

Weekly resistance remains unchanged with the yearly high-week close at 1.1775 and is backed closely by the upper parallel (near ~1.1860s) and key resistance at 1.1917-1.2019- a region defined by the 100% extension of the 2022 advance and the 38.2% retracement of the 2008 decline. Look for a larger reaction there IF reached (area of interest for possible top-side exhaustion / price inflection IF reached). Subsequent resistance objectives eyed at the 2021 HWC at 1.2227 and the 2018 high-close at 1.2456.

Initial weekly support rests with the March 2020 / 2022 high at 1.1497 and is backed closely by the yearly channel and 1.1394– a break / close below this level would be needed to suggest a more significant high is in place / a larger trend reversal is underway. The next major technical consideration rests with the May low-week close / 2024 HWC / 38.2% retracement of the yearly range at 1.1164/99.

Bottom line: Euro rebounded off the yearly uptrend into the start of the month but the threat for a larger correction remains while below the yearly high-close. From at trading standpoint, the immediate focus is on a breakout of the 1.1497-1.1775 range for guidance.

Keep in mind we get the release of key U.S. inflation data next week with the July Consumer Price Index (CPI) on tap Tuesday. Stay nimble into the release and watch the weekly closes here 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, Sr Technical Strategist

Follow Michael on X @MBForex