Euro Short-term Technical Outlook: EUR/USD Bears Halted at Support

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

Euro plunges 2.9% off yearly high- three-week decline now approaching downtrend support
EUR/USD risk for downside exhaustion / price inflection- ECB rate decision on tap
Resistance 1.0936/47, 1.0980-1.10, 1.1038(key)- Support 1.0871/79 (key), 1.0835, 1.08

The Euro is attempting to snap a four-day losing streak with EUR/USD exhausting near technical support earlier today. The focus is on possible price inflection off this mark with the bears vulnerable ahead of tomorrow’s ECB interest rate decision. Battle lines drawn on the Euro short-term technical charts into the close of the week.

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 had, “turned from technical resistance and threatens a larger correction within the broader uptrend. From a trading standpoint, rallies should be limited to the December high IF price is heading lower on this stretch – ultimately, Euro would need to mark an exhaustion low ahead of the 1.0980 for the broader April rally to remain viable.” The Euro sell-off intensified into the October open with a break below 1.0980 days later fueling a decline of more than 2.9% off the September / yearly high.

The decline is now approaching a major pivot zone at 1.0871/79- a region defined by the 1.618% extension of the September range, the 200-day moving average and the June high-day close (HDC). Risk for possible exhaustion / price inflection off this zone over the next few days.

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 the descending pitchfork we’ve been tracking since the start of the month with the lower parallel further highlighting key support here at 1.0871/79. Note that the 61.8% retracement of the 2024 yearly range rests just lower at 1.0835 and a close below this threshold would suggest a more significant high was registered last month. Subsequent support objectives seen at the 1.08-handle and the 2023 October trendline, currently near ~1.0750s.

Initial resistance stands with the objective weekly-open / March high-close / July high at 1.0936/47 and is backed by 1.0980-1.10. Near-term bearish invalidation is now lowered to the yearly open at 1.1038- a breach / close above this threshold is needed alleviate further downside pressure / suggest a more important low was registered this week.

Bottom line: Euro has plunged more than 2.2% since the start of the month with price now approaching confluent downtrend support. Looking for a reaction down here. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops- rallies should be limited to 1.10 IF price is heading lower on this stretch.

Keep in mind we get the release of the European Central Bank interest rate decision on Thursday with consensus estimates calling for a 25bps cut. Stay nimble into the release and watch the weekly closes 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

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