EUR/USD Technical Outlook: Tough Barrier Ahead

US Dollar, Euro, EUR/USD – Technical Outlook:

• Chance of a retreat as EUR/USD is running into stiff resistance.
• The broader bias for the single currency remains down
• What are the key levels to watch?

EUR/USD TECHNICAL FORECAST – NEUTRAL

The Euro is running into pretty strong resistance that could at least temporarily stall the recent rally against the US Dollar.

EUR/USD is testing a tough converged ceiling: the 200-day moving average, the August high of 1.0370, near the January 2017 low of 1.0340. The last time the pair was above the long-term average was in mid-2021, so a decisive break above it will be bullish, and not just from a short-term perspective.

EUR/USD Daily Chart

Chart Created Using TradingView

A break above the 200-day moving average would be a sign that the medium-term bearish outlook is changing. A decisive breach above could pave the way toward 1.0615 (the 38.2% retracement of the 2021-2022 slide). Momentum on shorter-time frame charts, including intraday and daily timeframes, remains positive, suggesting that a retreat is not imminent.

However, the trend and momentum on higher timeframe charts, including the weekly and the monthly, favor Euro weakness. Hence, the path of least resistance from a multi-week perspective remains sideways to down. In this regard, the key focus is on immediate support around 1.0250-1.0300. Any break below could push the pair towards 1.0120, near strong support at the late-October high of 1.0090. EUR/USD needs to stay above 1.0090 for the short-term upward pressure to hold.

EUR/USD Monthly Chart

Chart Created Using TradingView

EUR/USD’s medium-term trend is down. The single currency’s break this year against the greenback below a slightly upward-sloping trendline from 2015 indicates that the broader picture remains bearish. The price objective following the breakout of the seven-year sideway range works out to around 0.8900.

— Written by Manish Jaradi, Strategist for DailyFX.com