Euro Technical Forecast: EUR/USD Breakout Underway as Bulls Emerge

Euro Technical Forecast: EUR/USD Weekly Trade Levels

• Euro rebounds off multi-month trend support- threatens breakout of monthly opening-range
• EUR/USD risk for larger recovery within broader downtrend- FOMC, ECB, Core PCE on tap
• Resistance 1.0573/87 (key), 1.0718/77, 1.0939- Support 1.0448, 1.0352, 1.02 (key)

Euro is attempting to mark the largest single-week advance since November of 2023 with a rebound off downtrend support in EUR/USD now threatening a breakout of the January opening-range. Battle lines drawn on the Euro weekly technical chart into the Fed / ECB next week.

Euro Price Chart – EUR/USD Weekly

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

Technical Outlook: In last month’s Euro Technical Forecast we noted that, “a three-month sell-off takes EUR/USD into support with price marking bullish divergence into the lower parallel.”  Euro rebounded off Fibonacci support one week later at the 61.8% retracement of the 2022 advance at 1.02 (intraday low registered at 1.0178). The subsequent rally has extended more than 3.3% off the lows with EUR/USD attempting to breach the objective January opening-range highs / 2023 swing low today at 1.0448- watch the weekly close here.

Initial weekly resistance is eyed at the 38.2% retracement of the 2024 decline / 2023 low-week close (LWC) at 1.0573/87. Note the medina-line of the pitchfork (blue) converges on this threshold over the next few weeks and a breach / weekly close above is needed to suggest a more significant low was registered this month / a larger trend reversal is underway. Look for a larger reaction there IF reached with subsequent resistance eyed at the November high-week close (HWC) / February LWC / 52-week moving average at 1.0718/77.

Initial weekly support rests with the 2016 swing low at 1.0352 with key support steady at the 1.02-handle. Note that a weekly close below the lower parallel would likely fuel another bout of accelerated losses with the next major technical consideration seen at parity.

Bottom line: EUR/USD has rebounded off yearly trend support with a breakout of the monthly opening-range threatening a larger recovery here. From at trading standpoint, look to reduce long-exposure / raise protective stops on a stretch towards 1.0573/87 IF reached – losses would need to be limited to 1.0352 for the monthly breakout to remain viable with a close above the median-line needed to fuel the next leg of the advance.

Keep in mind the FOMC & ECB interest rate decisions are on tap next week with key inflation data (Core PCE) slated for Friday. Stay nimble into the releases and watch the weekly closes here for guidance. Review my latest Euro Short-term Outlook for a closer look at the near-term EUR/USD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex