Original article by Michael Boutros, FOREX.com
Rewritten and expanded version:
EURO TECHNICAL FORECAST: POTENTIAL FOR EUR/USD RALLY LIMITED BELOW RESISTANCE
Overview
The EUR/USD currency pair has posted a notable rally in recent trading sessions, driven by a weaker US dollar and market anticipation surrounding upcoming Federal Reserve actions. However, technical indicators suggest that the momentum may be losing strength, especially as the pair approaches a key resistance area. With medium-term patterns still in consolidation, traders are closely watching for either a breakout to continue the rally or a downside reversal that may signal a shift in sentiment.
This analysis provides a comprehensive technical breakdown of the current EUR/USD market conditions, explores support and resistance levels, and reviews the near-term and broader implications for price movements. The following report is based on the original findings of Michael Boutros for FOREX.com and has been expanded for depth and clarity.
Key Technical Highlights
– After rebounding from a major swing low, the EUR/USD has risen nearly 2.2% since late July.
– Price action is now testing trendline resistance on a multi-day basis, suggesting the possibility of exhaustion.
– The immediate focus remains on whether the pair can break above resistance or will revert lower within an ongoing consolidation structure.
– Key resistance and support levels are clearly defined; a move beyond these markers will determine near-term direction.
Multi-Week Price Action in Context
The euro has gained notable ground against the US dollar recently. Since the swing low on July 31, the pair has appreciated as investors dialed back expectations for further interest rate hikes by the Federal Reserve, favoring the eurozone currency in the short term. However, from a technical perspective, the price appears to be approaching a significant ceiling that could restrain further progress.
The strategy now centers around consolidation behavior seen since mid-June. Rather than developing into a strong, directional trend, EUR/USD has ranged within defined boundaries. This pattern suggests indecision in the market and positions the pair at an inflection point.
EUR/USD Daily Chart Breakdown
Price Structure:
– The euro has rallied toward a confluence resistance zone defined by:
– A downward-sloping multi-month trendline
– August monthly open at around 1.1018
– The 61.8% Fibonacci retracement of the July decline, located near 1.1027
– These levels converge near 1.1020 to 1.1030, creating a strong resistance cluster
– The Relative Strength Index (RSI) has returned to the neutral zone, hovering near 50–60, offering little directional bias at this moment
Support and Resistance Levels (Daily Frame):
– Near-term resistance:
– 1.1018–1.1027: Monthly open and Fibonacci retracement
– 1.1065: 100-day moving average
– Key support:
– 1.0912: Monthly opening-range support
– 1.0876: 61.8% Fibonacci extension of the ongoing pullback
– 1.0833: Monthly low, acting as a longer-term floor
If bulls manage to push EUR/USD above the resistance zone and sustain that breakout with follow-through momentum, bullish scenarios targeting 1.1065 and eventually 1.1100 may materialize. However, failure to breach this confluence zone could signal weakening momentum and a potential retreat toward support levels.
EUR/USD 4-Hour Chart Analysis
Zooming into intraday levels provides a clearer picture of the potential setup. Market participants are watching whether this rebound holds or if price stalls once again at the upper boundary of the range.
Intraday Resistance Levels:
– 1.1018–1.1027: Key overhead levels to watch; upside breach here could signal next leg higher in near-term trend
– 1.1065: Dynamic resistance aligning with medium-term moving average
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