This article provides a technical analysis excerpt from our comprehensive 2025 EUR/USD Outlook report, part of a series forecasting the coming year in currency markets.
EUR/USD Monthly Price Chart
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
The Euro’s price action remains contained within an ascending pitchfork pattern originating from the 2022 low. An April surge met resistance just before the 1.1275 mark as Q2 concluded. Subsequently, a reversal trend positioned EUR/USD for a potential third consecutive monthly decline by late December. The pair is currently testing support near the 2015 low around 1.0463, a crucial level to watch for inflection as we move into the new year.
Monthly momentum indicators are registering their lowest readings in over a year. An RSI (Relative Strength Index) reading below 40 at the close would signal a significant shift in momentum favoring bearish sentiment. Parity remains a critical support level, while key resistance, which would invalidate the broader downtrend, is identified at the 2020 low-month close (LMC) and the objective 2024 yearly open, around 1.1032/38. This 1.1038 area is crucial for determining the longer-term trajectory of EUR/USD.
EUR/USD Weekly Price Chart
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Zooming into the weekly timeframe, we observe a November rebound from the lower parallel of a descending pitchfork, which has been in focus since the September highs. Initial weekly support is located at the 2016 swing low of 1.0352. A break below this lower parallel could trigger the next significant downward move, potentially targeting the 61.8% Fibonacci retracement of the 2022 advance at 1.02 and parity. These levels are key areas to monitor for possible downside exhaustion and price reversals, should they be reached.
On the upside, weekly resistance is defined by the November high-week close (HWC) and the February low-week close (LWC) at 1.0719/77. A break and weekly close above this threshold would suggest a more substantial low is forming and potentially signal the start of a larger trend reversal. Further resistance lies at the March HWC at 1.0939 and the December HWC, aligning with the 2024 yearly open around 1.1038. Both of these levels represent potential areas for topside exhaustion and price inflection if tested. The 1.1038 level remains a critical resistance point to overcome for bullish momentum.
Bottom Line: Heading into 2025, the Euro remains susceptible to further depreciation against the US Dollar. The focus is on identifying an exhaustion low within the first half of the year. From a trading perspective, the bias remains to the downside as long as the price stays below 1.0777. Traders should watch for a significant reaction on any move towards the lower pitchfork parallel for directional clues. A break below 1.02 would likely accelerate the next major leg of the decline. For the 2022 advance to remain a valid long-term bullish structure, bulls must establish a low before parity is reached. The stage is set for a critical EUR/USD battle in 2025, with key levels like 1.1038 and parity defining the boundaries.
— Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on X @MBForex
