EUR/USD Recovery Could be Short Lived

EUR/USD Recovery Could be Short Lived


Euro Weekly Price Outlook: EUR/USD Recovery Could be Short Lived

Euro is up 0.54% against the US Dollar this week after reversing from long-term slope support. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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EUR/USD Weekly Price Chart

EURUSD

Notes:In my previous EUR/USD Weekly Technical Outlook we note that, “Weekly support remains at 1.1186 with a break below the 2017 pitchfork support around 1.1130s needed to validate a larger break of the multi-year uptrend formation in Euro.” Price briefly registered a low at 1.1110 last week before reversing sharply off the lower parallel with Euro now attempting to mark a weekly close back above the 61.38% retracement at 1.1186 into the close of the week.

Resistance / near-term bearish invalidation stands with the August low / 2018 trendline at 1.1301 – A weekly close above this threshold is needed to suggest a more significant low is in place with such a scenario targeting the 2018 yearly open at 1.1445– look for a bigger reaction there IF reached.

A break below 2017 pitchfork support would shift the focus towards consolidation support extending off the 2018 lows, currently around ~1.1040s – weakness beyond this threshold would risk substantial losses for Euro with subsequent weekly support objectives eyed at 1.0854 & the 78.6% retracement at 1.0815.

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Bottom line:Euro has responded to multi-year slope support and we’re looking for signs of basing in price action with a close above channel resistance needed to clear the way. A close here below 1.1186 would suggest / highlight the risk for another test of the lows before the potential for a larger recovery. From a trading standpoint, the risk remains lower sub-1.13 but be on the lookout for a downside price exhaustion / long-entries on a final test into the 2018 trendline. Review my latest EUR/USD Price Outlook for a look at the near-term technical picture.

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EUR/USD Trader Sentiment

EURUSD

  • A summary of IG Client Sentiment shows traders are net-long EUR/USD – the ratio stands at +1.54 (60.6% of traders are long) – bearish reading
  • Traders have remained net-long since April 12th; price has moved 0.6% lower since then
  • Long positions are 9.9% higher than yesterday and 17.5% lower from last week
  • Short positions are 11.4% lower than yesterday and 21.4% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURUSD prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger EURUSD-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in EUR/USD retail positioning are impacting trend- Learn more about sentiment!

Relevant Euro / USEconomic Data Releases

EURUSD

Economic Calendarlatest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Other Technical Forecast

Australian Dollar (AUD) Outlook: AUDUSD Still Looking Into The Abyss?

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

Other Weekly Technical Forecast

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