The Euro has shown resilience, bouncing back from key support levels and potentially ending a six-week losing streak against the US Dollar. This rebound, fueled by recent CPI data, has traders watching closely as EUR/USD approaches a critical juncture. The pair’s movement is now contingent on breaking out of its January opening range, with upcoming US Retail Sales figures and the Presidential Inauguration set to inject volatility into the market. Currently, the short-term technical landscape for the Euro suggests drawn battle lines, with key resistance at 1.0354, 1.0406/48 (pivotal), and 1.0587-1.0602, and support levels at 1.0245, 1.0198-1.0205 (critical), and 1.01.
EUR/USD Price Chart – Daily Analysis
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Daily Chart Technical Perspective: Looking back at the previous month’s Euro technical analysis, we highlighted EUR/USD testing monthly lows, maintaining its December opening range. It was noted that rallies were expected to face limitations around 1.06 if further declines were anticipated, with a necessary break below 1.0446 to confirm the downward trajectory. The Euro briefly touched 1.0535 before reversing course, ultimately breaching crucial support within four days. This breakdown triggered a significant selloff, pushing the pair down over 4.2% from the December peak.
However, the selling pressure found a floor at the start of the week, rebounding from a confluence of support around 1.0198-1.0205. This zone is technically significant, defined by 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 of the September decline. Adding to its importance, the lower parallel of an adjusted pitchfork pattern also converges in this area. This technical convergence suggests a potentially strong reaction point in the coming days, indicating a possible shift in momentum.
EUR/USD Price Chart – 4-Hour Analysis
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Intraday EUR/USD Dynamics: A closer examination of the Euro’s price action on a 4-hour chart reveals EUR/USD trading within a descending channel. The recent CPI-driven rebound has tested resistance at the 2025 yearly open price of 1.0354. For a more substantial bullish signal, price needs to decisively break and close above the 1.0406/48 zone. This area represents the 2017 low-day close and the October 2023 low. Such a move would suggest a more significant low has been established this week, potentially signaling a broader trend reversal is in progress. Looking higher, the next significant resistance to monitor is the 1.0587-1.0602 range, encompassing the 2023 low-week close and the April low. A strong reaction is anticipated here if price reaches this level.
Immediate support on the 4-hour chart is found at the weekly open of 1.0245, followed by stronger support at the 1.02 level. A break and close below this level would open the door for another wave of accelerated Euro selling, with subsequent support targets at 1.01 and finally, parity at 1.00. Both of these lower levels are zones where potential exhaustion or price reversals could occur if reached.
Trading Outlook: The Euro’s rebound from significant downtrend support suggests that the short-term bearish bias may be weakening while price remains above this critical zone. From a trading perspective, the immediate focus is on whether EUR/USD can break out of the 1.02-1.0354 range. While rallies are possible, they are likely to be capped below 1.0448 if the overall trend remains downward. A break below 1.02 would signal a resumption of the downtrend.
Traders should be prepared for potential volatility as US Retail Sales data is released, especially leading into an extended holiday weekend and the Presidential Inauguration on Monday. The new administration’s policies could trigger significant market reactions. Therefore, maintaining a nimble trading approach and closely monitoring weekly closing prices will be crucial for navigating the EUR/USD pair. For a more in-depth analysis of longer-term EUR/USD trading levels, refer to our latest Euro Weekly Technical Forecast.
Key EUR/USD Economic Data to Watch
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— Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on Twitter @MBForex
