Euro fell to fresh two-year lows against the US Dollar today before rebounding with the broader decline in question heading into the start of October trade. These are the updated targets and invalidation levels that matter on the EUR/USD price chart as we open Q4.
Euro Price Chart – EUR/USD Daily
Technical Outlook: In my previous Euro Price Outlook we noted that, “Euro turned from downtrend resistance last week and the focus is on a test of key support targets just lower.” Prices plummeted to fresh yearly lows into the October open with EUR/USD on pace to mark a daily reversal off downtrend support yet again today.
We’re looking for a reaction down here- a break below the 75% line o the descending pitchforkwe’ve been tracking off the yearly highs would expose subsequent daily support objectives at the lower parallel / 78.6% retracement at 1.0814. Initial daily resistance stands with the September open at 1.0990 with bearish invalidation now set to 1.1022– a breach / close above this threshold is needed to suggest a more significant low is in place.
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Euro Price Chart – EUR/USD 120min
Notes: A closer look at Euro price action sees EUR/USD continuing to trade within the confines of a descending channel formation with price rebounding today at the confluence of the 1.618% ext / lower parallel at 1.0883. The subsequent rebound is now testing weekly open resistance at 1.0942 with the upper bounds of the channel just higher.
A topside breach here exposes 1.0967 backed by 1.0990– a close above would be needed to keep the focus on the Fibonacci confluence near 1.1022. Look for initial support at 1.0905 IF Euro is heading higher on this move. A break below 1.0883 would ultimately beneeded to fuel the next leg lower targeting the highlighted trendline confluence around 1.0840s.
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Bottom line: Euro has made another rebound off downtrend resistance into the start of the week / month / quarter and the threat remains for an exhaustion low in price into the open. From a trading standpoint, a good place to reduce short-exposure / lower protective stops. Keep an eye on the weekly opening range with a break of weekly support needed to keep the immediate short-bias viable. Review my latest Euro Weekly Price Outlook for a deeper look into the longer-term EUR/USD technical trading levels.
Euro Trader Sentiment – EUR/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long EUR/USD – the ratio stands at +2.81 (73.8% of traders are long) – bearish reading
- Traders have remained net-long since July1st; price has moved 2.3% lower since then
- Long positions are 2.0% lower than yesterday and 21.3% higher from last week
- Short positions are0.2% lower than yesterday and 31.7% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week andthe combination of current positioning and recent changes gives us a further mixed EURUSD trading bias from a sentiment standpoint.
See how shifts in Euro retail positioning are impacting trend- Learn more about sentiment!
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– Written by Michael Boutros, Currency Strategist with DailyFX
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