In this series, we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Euro is trading into a critical support confluence early in the month with major event risk on tap this week. Here are the key targets & invalidation levels that matter on the EUR/USD weekly chart.
EUR/USD WEEKLY PRICE CHART
Notes: In last week’s EUR/USD Price Outlook, we highlighted the 1.1780/91 resistance barrier while noting that, “a breach / close here is still needed to fuel the next ‘leg’ higher in price.” Euro probed into this region for days (never closed above) with a final attempt post-FOMC giving way to a 2.6% sell-off in the single currency.
The decline is now testing multi-year slope support extending off the November 2015 lows (red) with the 61.8% retracement just lower highlighting a key zone at 1.1498-1.1510– we’re looking for a reaction off this mark with the immediate short-bias at risk while above. Ultimately a breach above the 1.17-handle would be needed to shift the broader focus back to the long-side.
Bottom line:Looking for signs of downside exhaustion while above 1.1498 for now. From a trading standpoint, a good spot to reduce short-exposure / lower protective stops with the near-term focus on a possible long-entries. A break / close below would invalidate the reversal play with such a scenario targeting the yearly low-week close at 1.1436 backed by the 200-week moving average / slope support at ~1.1330and the 1.13 handle. Keep in mind we’re just now beginning to carve out the October opening range with US Non-Farm Payrolls (NFP) on tap this Friday.
EUR/USD TRADER SENTIMENT
