Euro Technical Price Outlook: EUR/USD Near-term Trade Levels
- Euro updated technical trade levels – Daily & Intraday Charts
- EUR/USD plummets post-FOMC– monthly range break keeps focus on support just lower
- Resistance 1.1186, 1.1221, 1.1263 (Key) – Support at 1.1109, 1.1050 & 1.1002 (Key)
Euro plunged against the US Dollar on the heels of yesterday’s FOMC rate decision with EUR/USD plummeting more than 1.8% from the weekly open. The decline marks a breakout of the January range and while further losses are likely, the immediate sell-off may be vulnerable as price approaches initial support zones just lower. These are the updated targets and invalidation levels that matter on the EUR/USD technical price charts heading into the close of the week. Review my latest Strategy Webinar for an in-depth breakdown of this Euro technical setup and more.
Euro Price Chart – EUR/USD Daily
Technical Outlook: Euro broke below confluent channel support this week at the 61.8% Fibonacci retracement of the 2020 advance at 1.1290 – the decline also marks a breakout of the January opening-range with EUR/USD already down more than 3% off the monthly highs. Can the intensity of this Euro sell-off continue?
While the technical damage has been done, the immediate decline is now approaching areas of interest for possible downside exhaustion. Initial support rests at 1.1109 (2019 April / May pivot zone) backed by the lower parallel (highlighted region near ~1.1050s) and the 78.6% retracement at 1.1002– looking for a reaction into one of these levels.
Euro Price Chart – EUR/USD 120min
Notes: A closer look at Euro price action shows EUR/USD trading within the confines of an modified pitchfork formation extending off the highs with the recent sell-off stalling here at the median-line. Initial resistance now stands with the December lows at 1.1221 backed by the weekly opening-range low / upper parallel at 1.1263– rallies should be limited to this slope IF price is indeed heading lower. Ultimately a topside breach / close above the 1.1290 would be needed to shift the broader focus higher again with yearly open resistance seen at 1.1383.
Bottom line: The Euro breakdown has already extended towards downslope support and may be a bit stretched here. From at trading standpoint, a good zone to reduce short-exposure / lower protective stops – recoveries should be capped by the upper parallels and we’ll be on the lookout for an exhaustion low in the weeks ahead to offer more favorable opportunities. Keep in mind we still have some major event risk on tap still with US core inflation data tomorrow and the ECB next week. Review my latest Euro Weekly Price Outlook for an in-depth look at the longer-term EUR/USD technical trade levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Euro Trader Sentiment – EUR/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long EUR/USD – the ratio stands at +2.16 (68.39% of traders are long) – typically bearish reading
- Long positions are 9.92% higher than yesterday and 9.83% higher from last week
- Short positions are13.88% lower than yesterday and 21.97% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bearish contrarian trading bias from a sentiment standpoint.
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– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex