Euro Technical Forecast: EUR/USD Bears Push Towards Parity

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro poised to mark third-consecutive weekly decline- breaks to fresh yearly lows
• EUR/USD testing technical downtrend support- risk for exhaustion / price inflection
• Resistance 1.0508, 1.0670 (key), 1.0777– Support 1.0352, 1.02, 1.00

Euro has plunged for seven of the last eight weeks with EUR/USD breaking to fresh yearly lows on Friday. The decline is responding to confluent downtrend support today and while the broader outlook remains weighted to the downside, the immediate decline may be vulnerable into the close of the month. Battle lines drawn on the Euro weekly technical chart.

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 testing support, “at the yearly range lows – risk for price inflection. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to the median-line / 1.0777 IF price is heading lower on this stretch with a close below 1.0587 needed to fuel the next leg of the decline.”

Euro broke lower later that week with the sell-off extending nearly 7.9% off the September / yearly highs. The decline halted at confluent downtrend support on Friday near the 2016 swing low at 1.0352. Note that the lower parallel of the descending pitchfork we’ve been tracking converges on this level and we’re looking for a larger reaction off this mark.

Initial weekly resistance now eyed back at the 2023 low-close at 1.0508 and is backed by the 38.2% retracement of the yearly range at 1.0670- we will reserve this threshold as our medium-term bearish invalidation level. Subsequent resistance seen at the February low-week close (LWC) at 1.0777 with a breach above the 61.8% retracement at 1.0835 ultimately needed to shift the broader focus back to the long-side for the Euro.

A break / close below the lower parallel (blue) would threaten another accelerated decline with subsequent support objectives seen at the 61.8% Fibonacci retracement of the 2022 advance at the 1.02-handle and parity (1.00)- look for a larger reaction there IF reached with the risk for downside exhaustion into the 2022 parallel.

Bottom line: A three-week plunge takes EUR/USD into downtrend support and a major pivot zone- risk for downside exhaustion / price inflection here. From a trading standpoint, a good zone to reduce portions of Euro short-exposure / lower protective stops- rallies should be limited to 1.0670 IF price is heading for a break lower with a closer below 1.0352 needed to fuel the next leg of the decline.

Keep in mind we have key inflation on tap into the close of a shortened holiday-week. Stay nimble into the monthly cross and watch the weekly closes here. I’ll publish an updated Euro Short-term Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

Key Euro / US Economic Data Releases

 

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex