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Euro Dollar Outlook: EUR/USD Bounce Faces First Test- NFP Levels

Euro Technical Price Outlook: EUR/USD Near-term Trade Levels

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD recovery off confluence support in focus- broader bearish invalidation 1.1859
  • Trade remains constructive while above 1.1659- Risk for exhaustion sub-1.17652
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Euro plummeted nearly 3% off the yearly highs this month with a rebound off technical support early in the week offering a reprieve to the recent selling pressure. The recovery takes price towards near-term downtrend resistance and we’re looking for a reaction just higher with the key US data prints still on tap into Friday’s Non-Farm Payroll (NFP) releases. Is this just a near-term correction or is a larger base forming? These are the updated targets and invalidation levels that matter on the EUR/USD price charts heading into the close of the month / quarter. Review my latest Strategy Webinar for an in-depth breakdown of this Euro technical setup and more.

Euro Price Chart – EUR/USD Daily

Euro Price Chart - EUR/USD Daily - Euro vs US Dollar Trade Outlook- Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; EUR/USD on Tradingview

Technical Outlook: In our last Euro Technical Price Outlook we noted a constructive trade bias while above the 1.15-handle with a breach above near-term resistance, “needed to mark resumption towards the November 2017 swing high at 1.1961 and the 2018 yearly open at 1.2005.” EUR/USD registered a high at 1.2011 into the September open before reversing sharply with a break below the monthly opening-range low last week fueling a leg lower in price.

The decline rebounded off confluence support at the October 2018 high / 25% parallel at 1.1621 early in the week with the recovery now attempting to breach median-line resistance at ~1.17. A close above this region would keep the rebound viable with resistance objectives eyed at 1.1765 and the 75% parallel- regions of interest for possible topside exhaustion IF reached. Bearish invalidation now lowered to the 61.8% Fibonacci retracement at 1.1859. A break lower from here would risk a larger correction heading into the start of October with the next major support zone down at 1.1486/99.

Euro Price Chart – EUR/USD 120min

Euro Price Chart - EUR/USD 120min - Euro vs US Dollar Trade Outlook - Technical Forecast

Notes: A closer look at Euro price action sees EUR/USD trading within the confines of a descending pitchfork formation extending off the August / September highs. A rebound off the median-line early in the week has cleared near-term resistance at 1.17 with confluence resistance seen just higher at 1.1754/65– look for a reaction there for guidance IF reached with a breach / close above needed to keep the focus higher in price. Initial support now back at 1.1659 backed by the weekly open at 1.1621– weakness beyond this threshold would shift the focus back towards longer-term slope support at 1.16 and beyond.

Bottom line: Euro has rebounded off near-term downtrend support and the focus is on this near-term recovery. From at trading standpoint, look for a reaction on a test of 1.1754/65– a good zone to reduce long-exposure / raise protective stops. Ultimately a deeper price correction may offer more favorable opportunities closer to trend support with breach above the 1.1859 needed to mark resumption of the broader uptrend. 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

Euro Trader Sentiment - EUR/USD Price Chart - Euro Positioning - Trade Outlook - Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-short EUR/USD – the ratio stands at -1.15 (46.58% of traders are long) – neutral reading
  • Long positions are 2.25% higher than yesterday and 10.02% higher from last week
  • Short positions are0.55% lower than yesterday and 10.13% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse lower despite the fact traders remain net-short.

Change in Longs Shorts OI
Daily-11%1%-4%
Weekly-12%0%-5%

Key Euro / US Data Releases

Key Euro / US Data Releases - EUR/USD Economic Calendar - US / Eurozone Event Risk

Economic Calendarlatest economic developments and upcoming event risk.

Active Technical Setups

– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex