Euro is set to break its six-week losing streak, rebounding from crucial technical support levels. This recovery in the EUR/USD pair comes as it tests the January opening-range, with significant US economic data releases and a Presidential Inauguration on the horizon. Traders should watch key resistance at 1.0354, 1.0406/48 (key), and 1.0587-1.0602, and support at 1.0245, 1.0198-1.0205 (key), and 1.01.
After bouncing off key support on Monday, the Euro has extended its gains by over 1.7% from the weekly lows following a CPI rally. However, this upward movement met resistance at the yearly open price. The focus now turns to a potential breakout from the January opening range to determine the next direction, with the possibility of a bullish scenario if the price remains above the weekly lows. Traders should be prepared for volatility in the Euro’s short-term technical outlook as we approach a holiday weekend.
EUR/USD Price Chart – Daily Analysis
Chart by Michael Boutros, Sr. Technical Strategist; TradingView EUR/USD Chart
Technical Context: In our previous Euro technical analysis, we highlighted EUR/USD’s test of monthly lows, maintaining a December opening-range. It was noted that “rallies should be capped at 1.06 if further downside was expected, requiring a break below 1.0446 to trigger the next decline.” The Euro did briefly peak at 1.0535 before reversing, and subsequently broke through key support four days later, leading to a more than 4.2% drop from the December high.
This recent sell-off found support at the beginning of the week in the 1.0198-1.0205 area. This zone is defined by a confluence of technical levels, including the 161.8% extension of the September decline, the September 2022 swing high, the 61.8% retracement of the 2022 advance, and another 161.8% extension from the September decline. The lower boundary of an adjusted pitchfork also converges in this area, emphasizing its technical importance in the coming days. We anticipate a significant reaction from this level.
EUR/USD Price Chart – 240min Analysis
Chart by Michael Boutros, Sr. Technical Strategist; TradingView EUR/USD Chart
Detailed Observations: A closer look at the 240-minute chart shows EUR/USD trading within a descending channel. The recent CPI-driven rebound is testing resistance at the 2025 yearly open price of 1.0354. For a confirmation of a significant low and potential trend reversal, the price needs to break and close above the 2017 low-day close (LDC) and the October 2023 low at 1.0406/48. The next major resistance to consider is between 1.0587-1.0602, marked by the 2023 low-week close (LWC) and the April low. A substantial reaction is expected if the price reaches this zone.
Immediate support is at the weekly open of 1.0245, followed by key support at the 1.02 level. A break below this level could trigger further Euro losses, with potential targets at 1.01 and parity at 1.00. These lower levels are significant areas to watch for possible exhaustion or price reversals if reached. Analyzing the 240 Eur Usd level directly in this context, while not a key technical level mentioned, understanding price movements around levels like 1.0240 or 1.02 is crucial for short-term EUR/USD trading strategies.
Trading Strategy Outlook: The Euro’s rebound from downtrend support has put the short-term bearish bias at risk as long as the price remains above key support. From a trading perspective, the immediate focus is on a breakout from the 1.02-1.0354 range. Rallies should be limited below 1.0448 if the broader trend remains down, and a close below 1.02 would signal a resumption of the downtrend.
Traders should be aware of upcoming US retail sales data and the inauguration of President Trump on Monday, which are likely to introduce market volatility. Be prepared for swift market reactions and monitor weekly closes for directional cues. For a longer-term view on EUR/USD trading levels, refer to our latest Euro Weekly Technical Forecast.
Key EUR/USD Economic Data Releases
Economic Calendar – Stay updated on economic events and market risks.
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By Michael Boutros, Sr Technical Strategist at FOREX.com
Follow Michael on Twitter @MBForex
