Euro Short-term Outlook: EUR/USD Rally Nears Key Resistance- Breakout or Reversal?

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

• EUR/USD rebounded after a sharp decline but remains within a broader downtrend structure
• Price is approaching key resistance levels at the upper bounds of the multi-month downtrend- reaction here could determine the next directional move
• Key event risk into the April open with US retail sales, ADP employment & NFPs on tap into the close of a shortened holiday week
• Resistance 1.1565, 1.1598-1.1612 (key), 1.1667/76- Support 1.1492/97, 1.1460 (key), 1.1387-1.1405

EUR/USD has staged a modest recovery after breaking below multi-month support earlier this month, but the broader technical structure remains tilted to the downside. The rebound comes after a sharp decline that briefly pushed price to fresh monthly lows before stabilizing, with the pair now approaching a key resistance zone defined by a multi-month downtrend structure. This area may prove pivotal in the days ahead, with a break higher needed to suggest a more meaningful low is in place, while failure here would keep the focus on resumption of the broader decline. Battle lines drawn on the Euro short-term technical charts.

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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 my last Euro Short-term Technical Outlook we noted that EUR/USD was attempting to break below multi-month support and that, “From a trading standpoint, rallies should be limited to the 200-day moving (~1.1673) IF price is heading lower on this stretch with a close below 1.1589 needed to keep the immediate decline viable. Look for a larger reaction on a drop towards 1.1492/97 IF reached.” Euro broke lower later that day with price plunging 2.2% off the weekly high to register an intraday low at 1.1411 on March 13 before rebounding.

The recovery failed at former support with another decline of more than 1.6% rebounding this week at the 78.6% retracement of the advance off the yearly low at 1.1460. Was a more significant low registered on March 13? The focus is on this recovery with downtrend resistance now in view and a reaction into the April open may offer further guidance here.

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 a descending pitchfork extending off the January high. The recovery is now approaching initial resistance at the 61.8% retracement of the most recent decline at 1.1565. Downtrend resistance rests just higher and is backed by near-term bearish invalidation at the January low-close and the 100% extension of the decline off the January high at 1.1598-1.1612. A breach / daily close above this threshold is needed to suggest a more significant low is in place and a larger trend reversal is underway. The next major technical consideration is eyed with the 38.2% retracement of the January decline and the 200-day moving average at 1.1667/76. Look for a larger reaction there IF reached.

Initial support rests with the 1.1492/97 pivot zone- a region defined by the November low-day close (LDC) and the March 2020 & 2022 highs. A break / close below 1.1460 is needed to mark downtrend resumption towards subsequent support at the May high-day close (HDC) and the July low-close at 1.1386-1.1405 and the 38.2% retracement of the 2025 advance at 1.1355. Note that the 25% parallel converges on this level into the close of the week.

 

Bottom line: A rebound off the median-line is now approaching downtrend resistance- looking for a reaction off this slope for guidance. From a trading standpoint, losses should be limited to 1.1492 IF price is indeed heading higher on this stretch with a close above 1.1612 ultimately needed to invalidate the January downtrend.

Keep in mind we’re heading into the close of the month in a shortened holiday week with major US data still on tap. Retail sales and ADP employment figures are slated for tomorrow with the highly anticipated Non-Farm Payroll report on Friday. At the same time, the markets are responding to reports today that the Iranian president is open to ending the war if they receive security guarantees. Stay nimble into the monthly cross and ensure risk parameters are adjusted into the close of the week- threat for a gap into the Sunday open depending on the data / war headlines. Review my latest Euro Q2 Outlook 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, Senior Technical Strategist

Follow Michael on Twitter @MBForex