Euro Technical Outlook: EUR/USD Short-term Trade Levels
- Euro falters into uptrend resistance- erases entire post-Fed rally
- EUR/USD sell-off approaching support at monthly low- March opening-range intact
- Resistance 1.0889, 1.0939, 1.0969- Support 1.0838, 1.0795-1.0804, 1.0704/12 (key)
Euro has turned lower on the week with EUR/USD reversing yesterday’s post-FOMC rally. A sharp turn from uptrend resistance is searching for support with the decline now approaching technical hurdles into the March low. These are the updated targets and invalidation levels that matter on the Euro short-term technical charts on heels of the Fed.
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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 EUR/USD Short-term Technical Outlook we noted that Euro was testing downtrend resistance, “with the multi-week advance vulnerable sub-1.09. From a trading standpoint, losses should be limited to 1.0769 IF price is heading for a breakout here with a close above 1.09 needed to fuel the next leg higher.”
Price held resistance for the following few days with Euro registering an intraday low at 1.0795 before reversing sharply higher. The advance exhausted into confluent resistance in early March around the 61.8% Fibonacci retracement of the December decline at 1.0970 with EUR/USD falling more than 1.3% into this week’s open. Yesterday’s Fed-inspired rally abruptly failed at the objective monthly-open / 75% parallel near ~1.0939 with price already erasing the entire advance. The focus is on a test of support in the days ahead.
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 continuing to trade within the confines of an ascending pitchfork formation extending off the February lows. Initial support rests at the 50% retracement / 200-day moving average at 1.0838 and is backed by 1.0795-1.0804- a region defined by the 100% extension of the monthly decline and the 61.8% retracement of the February advance.
Note that this region converges on the lower parallel into the close of the month and a break / close below this threshold would suggest a more significant high was registered this month and threaten a larger breakdown towards the 61.8% retracement of the October advance / 2023 yearly open at 1.0704/12.
Initial resistance is now eyed at the median-line / objective weekly open at 1.0889 and is backed again by 1.0939. Ultimately, a topside breach / close above 1.0970 is needed to mark uptrend resumption with subsequent resistance eyed at the objective yearly open / December high-day close (HDC) at 1.1038/60- look for a larger reaction there IF reached.
Bottom line: A reversal off uptrend resistance is now threatening a test of uptrend support. From a technical standpoint, we’re on the lookout for a possible exhaustion low in the days ahead. From a trading standpoint, look to reduce portions of short-exposure on a stretch towards 1.0795– rallies would need to be limited to the March high-day close IF price is heading lower.
Keep in mind that the March opening-range remains intact, and we’ll be looking for the breakout to offer further guidance here- watch the weekly close. 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
