Euro Short-term Outlook: EUR/USD Threatens Bear Market Rebound

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

Euro snaps three-week sell-off, rebounds off key technical support- resistance in view
EUR/USD monthly opening-rang taking shape- threat for larger bear-market recovery
Resistance 1.0587-1.0602, 1.0670/81, 1.0730 (key)- Support 1.0340-1.0405 (key), ~1.0305, 1.0200/04

Euro is attempting to recover off the yearly low with EUR/USD carving the December opening-range just below a major pivot zone. The focus is on a possible breakout in the days ahead with US non-farm payrolls on tap into the close of the week. Battle lines drawn on the Euro short-term technical charts into the open of the month.

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 the EUR/USD sell-off was attempting to break the yearly lows bears eyeing a, “massive pivot zone at 1.0340-1.0406- a region defined by the 2017 low, the 2017 LDC, and the 50% retracement of the broader 2022 advance (an area of interest for possible downside exhaustion / price inflection IF reached).” Euro registered an intraday low at 1.0333 last week before rebounding sharply into the close of November. A recovery of more than 2.5% failed on Friday at the 2023 low-week close (LWC) / April low at 1.0587-1.0602- looking for inflection off this pivot zone early in the month.

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 trading within the confines of a proposed ascending pitchfork with the pullback rebounding off the 25% parallel yesterday. Initial support rests with the 2023 low-day close (LDC) at 1.0466 with a break / close below the 1.0340-1.0406 pivot zone needed to fuel the next major leg of the decline. Subsequent support objectives eyed at the lower parallel (currently ~1.0305) and 1.0200/04- a region defined by the 61.8% retracement of the 2022 advance and the 1.618% extension of the September decline. Look for a larger reaction there IF reached.

A topside breach above 1.0587-1.0602 would threaten a larger correction towards the 38.2% retracement / June LDC at 1.0670/81 and upper parallel. Ultimately, a breach / close above the November high-day close (HDC) at 1.0730 would be needed to suggest a more significant low was registered last month / a larger trend reversal is underway with subsequent resistance objectives seen at the August low / October LDC at 1.0777/82 and the 200-day moving average (currently near ~1.0848).

Bottom line: Euro responded to major support last week the focus into the start of the month is on this rebound. From a trading standpoint, losses would need to be limited to the 1.04-handle IF EUR/USD is heading for a larger recovery here with a close above 1.06 needed to shift the near-term focus higher. Ultimately, rallies would need to be limited to 1.0730 for the September downtrend to remain viable with a close below 1.0340 needed to fuel the next major leg of the decline.

For now, look for a breakout of the monthly opening-range which is taking shape just below resistance. Keep in mind we get the release of US non-farm payrolls on Friday- stay nimble into the release and watch the weekly close here for guidance. 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.

Active Short-term Technical Charts

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

Follow Michael on Twitter @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.