Euro has rallied nearly 4% off the yearly lows with the advance now approaching the July highs. While the broader risk remains weighted to the topside, we’re looking for a near-term pullback to offer favorable entries. Here are the updated targets and invalidation levels that matter on the EUR/USD charts this week.
EUR/USD DAILY PRICE CHART
Technical Outlook: In my previous EUR/USD Technical Outlook we noted that although price was vulnerable for a near-term pullback, “Seasonal tendencies (heading into September) favor Euro strength and the focus remains weighted to the topside in price while above 1.1510/29.” EUR/USD marked registered a low at 1.1526 last week before rebounding higher with the advance now trading just below targeted resistance at the 38.2% retracement / July high at 1.1780/91.
Interim daily support rests with the 100-day moving average at ~1.1665 with broader bullish invalidation down at the monthly open at 1.1595. A breach above this threshold targets the June highs / pitchfork resistance at 1.1850/65– look for a bigger reaction there.
EUR/USD 240MIN PRICE CHART
Notes: A closer look at Euro price action shows a clear break of the weekly opening-range and leaves the risk-weighted to the topside into the close of the week. A modified pitchfork extending off the August / September lows further highlighting the 1.1780/91 near-term resistance barrier- a breach / close here is, “still needed to fuel the next ‘leg’ higher in price”.
Initial support rests at 1.1722 with near-term bullish invalidation now raised to 1.1654/64. A topside breach above the 1.1850 resistance target eyes subsequent topside objectives at the 200-day moving average at ~1.1947 and the yearly open at 1.2005.
Bottom line: The focus remains higher in price while within this formation and we’ll favor fading weakness targeting a topside breach of the median line. From a trading standpoint, look to reduce long exposure heading into 1.1780/91 with a pullback likely to offer more favorable entries ahead of the breach. IF price breaks lower, we’re neutral with a move sub-1.1510 needed to mark resumption of the broader downtrend. Keep in mind there’s major event-risk on tap next week which is likely to fuel further EUR/USD volatility.
