Euro Technical Forecast: EUR/USD Rally Fades at Fibonacci Resistance

Euro Technical Forecast: EUR/USD Weekly Trade Levels

Euro poised for largest monthly rally since December- largest monthly-range since May
EUR/USD marks largest weekly advance since July- now testing key Fibonacci resistance
Resistance 1.0960, 1.1108, 1.1228/75– Support ~1.07851, 1.0704/65, 1.0587

Euro has surged nearly 5% off the October / yearly lows with the rally exhausting into technical resistance this week. While the breakout does shift the focus higher in EUR/USD, the immediate rally may be vulnerable here near-term, and threat of a large setback remains while below yesterday’s highs. These are the updated targets and invalidation levels that matter on the EUR/USD weekly technical chart.

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Euro Price Chart – EUR/USD Weekly

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

Technical Outlook: In last month’s Euro Technical Forecast, we highlighted key resistance / bearish invalidation at, “1.0704/65- a region define by the objective 2023 yearly open, the 52-week moving average, and the 38.2% retracement of the entire yearly range. A breach / weekly close above this threshold would be needed to suggest a more significant low was registered this month and threaten a larger recovery towards former slope support (currently ~1.0850s) and key resistance at the 61.8% Fibonacci retracement at 1.0960”.

EUR/USD broke out three-weeks later with a rally of nearly 1.9% registering an intraday high at 1.0965 yesterday before exhausting. It's worth noting that last week marked the largest range and largest rally since July, just days before Euro topped for the year- risk for some pullback here.

Initial weekly support rests with the 52-week moving average (currently ~1.0782) and is backed closely by 1.0704/65- we’ll reserve this threshold as our bullish invalidation level and a close below could threaten resumption of the broader EUR/USD downtrend towards the yearly low-week close at 1.0587.

A topside breach / weekly close above Fibonacci resistance is needed to fuel the next leg higher in price with such a scenario exposing the 2023 high-week close at 1.1108 and a critical technical confluence at 1.1228/75- a region defined by the yearly high-close, the 61.8% retracement of the 2021 decline and the objective 2023 swing high. Look for a larger reaction there IF reached.

Bottom line: Euro has stretched into Fibonacci resistance and while the pivot above the yearly-open does keep the focus higher, the immediate advance may be vulnerable while below this threshold. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to the 52-week moving average IF price is heading higher on this stretch with a close above 1.0960 needed to fuel the next leg in price. I’ll publish an updated Euro Short-term Technical Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

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