Euro Short-term Outlook: EUR/USD Poised for February Breakout

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

• Euro snaps tariff sell-off- defends 1.02 support for a second time in two-months
• EUR/USD threat for larger recovery within broader downtrend- U.S. Non-Farm Payrolls on tap
• Resistance 1.0448, 1.0492 (key), 1.0587-1.0602- Support 1.0354/61, 1.03 (key), 1.0244

Euro is fractionally higher this week despite a range of nearly 2.3% with EUR/USD paring early-week losses spurred on by the Trump tariff threat. A rebound off downtrend support keeps the focus on this recovery with the bears vulnerable while above the 1.03-handle. Battle lines drawn on the Euro short-term technical charts heading into NFPs tomorrow.  

Euro Price Chart – EUR/USD Daily

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

Technical Outlook: In last month’s Euro Short-term Technical Outlook we noted that EUR/USD had rebounded off confluent downtrend support, “and the broader short-bias may be vulnerable near-term while above. From at trading standpoint, the immediate focus is on a breakout of the 1.02-1.0354 range for guidance- rallies should ultimately be limited to the 1.0448 IF price is heading lower on this stretch with a close below 1.02 needed to mark trend resumption.”

Euro broke higher the following week with EUR/USD registering an intraday high at 1.0533 before reversing with price closing virtually unchanged for January. The early-week, tariff inspired sell-off has been completely erased with Euro failing to close back below former channel resistance (now support). A pivot back above the yearly open and leaves the potential for a larger recovery here in the days ahead.

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 an ascending pitchfork with the 25% parallel further highlighting near-term support here at 1.0354/61- a region defined by the 2016 swing low, the 2025 yearly open, and the 38.2% retracement of the weekly range. Near-term bullish invalidation is set to the 61.8% retracement at the 1.03-handle. Subsequent support rests with the January low-day close (LDC) at 1.0244 with a break / close below 1.02 still needed to mark downtrend resumption.

Initial resistance steady is eyed with the October 2023 low at 1.0448 and is backed by the January high-day close (HDC) at 1.0492. A breach / daily close above the median-line is needed to fuel the next leg of the advance towards key resistance 1.0573-1.0602- a region defined by the 38.2% retracement of the September decline, the 2023 low-week close (LWC) and the April swing low. Strength beyond this threshold would suggest that a more significant low was registered last month a larger reversal is underway- look for a larger reaction there IF reached.

Bottom line: Euro has defended the 1.02-handle for the second time in as many months and the focus is on the rebound off downtrend support. From a trading standpoint, losses would need to bel limited to 1.03 IF price is heading higher on this stretch with a close above 1.0492 needed to fuel the next leg in price.

Keep in mind we get the release of U.S. Non-Farm Payrolls tomorrow with key inflation and retail sales data son tap next week. Stay nimble into the releases and watch the weekly closes 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.

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

Follow Michael on Twitter @MBForex