Original article by ActionForex.com
Source: https://www.actionforex.com/technical-outlook/eurusd-outlook/609181-eur-usd-weekly-outlook-424/
EUR/USD Weekly Technical Outlook: Consolidation and Potential Reversal Zones
The EUR/USD pair wrapped up the past week with limited directional movement despite exhibiting mild downside pressure. The currency pair continued its overarching consolidation that began from its year-to-date low of 1.0600 registered in mid-April. The lack of meaningful momentum on either side indicates a market hesitancy to commit without stronger drivers, keeping the price action largely range-bound around the 1.0700 region.
Price movement for the week confirms a short-term neutral stance, consolidating within prior established ranges. However, from a technical perspective, high-level risks remain of further declines in the absence of bullish follow-through.
Weekly Technical Chart Overview
– The EUR/USD faced heavy resistance around 1.0915, corresponding with the 38.2% Fibonacci retracement level drawn from the 2023 high of 1.1275 down to the 2024 low of 1.0600.
– On the downside, immediate support rests near 1.0600, with the potential for the pair to test that zone again if bearish momentum continues to dominate.
– The pair attempted several recoveries but was capped around the 1.0785 level, indicating strong selling pressure.
– The 55-week Exponential Moving Average (EMA), now aligned around 1.0830, remains a formidable resistance and a technical ceiling for EUR/USD.
– On balance, the currency pair failed to establish a higher high or higher low, reinforcing the market’s indecisiveness and reinforcing the current consolidation.
Daily Chart Insights and Trend Indicators
– Looking at the daily chart, the EUR/USD remains within a descending trend channel initiated from the December 2023 high. Resistance levels have consistently suppressed buying pressure, while lower support levels remain under pressure.
– Momentum oscillators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) are displaying inconclusive bias:
– The RSI has remained below the 50 neutral mark, suggesting limited bullish strength.
– MACD signals remain weak, hovering beneath the zero line, showing that bearish control continues to persist marginally.
– Price structure on the daily frame suggests the potential for further oscillation unless a strong fundamental catalyst breaks the current rhythm.
– Sellers appear inclined to test the short-term support region at 1.0665-1.0640, with a break possibly opening space toward the yearly low of 1.0600.
– On the upside, resistance remains formidable at 1.0915, where several failed rally attempts already occurred.
Key Technical Levels to Watch
Support Levels:
– 1.0665: Near-term horizontal support and a previous area of consolidation.
– 1.0640: Closer to the 61.8% Fibonacci retracement from the March-to-April rally.
– 1.0600: Year-to-date low and strong psychological level.
Resistance Levels:
– 1.0785: Recent swing high; a level of active selling pressure.
– 1.0830: 55-week EMA serving as key resistance.
– 1.0915: Strong multi-month resistance marked by Fibonacci retracement and former pivot.
Weekly Elliott Wave and Structural Outlook
– From an Elliott Wave perspective, the pair appears to be completing a complex corrective structure. The consolidation from April could be classified as a potential wave B of an ongoing ABC pattern.
– The impulsive drop from 1.1138 to 1.0600 may represent wave A, with a current corrective upward retracement in play as wave B. If the corrective move completes without surpassing 1.0915, a wave C decline could unfold, targeting a new low beneath 1.0600.
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