EUR/USD Weekly Outlook

The EUR/USD exchange rate showed some volatility last week, initially declining but then recovering near the 38.2% retracement level of 1.0358 to 1.0953, specifically at 1.0726, as anticipated. This week begins with a neutral bias. If the price breaks through the minor resistance at 1.0857, it would indicate that the correction that started from 1.0953 has already concluded. A retest of the high at 1.0953 is expected to follow. Should the pair successfully break this level, it could resume its upward momentum originating from a low of 1.0176, aiming towards the key resistance at 1.1274.

In the broader view, the previous strong break above the 55-week Exponential Moving Average (EMA), currently around 1.0692, suggests that the downward move from the 2024 high of 1.1274 has completed as a three-wave correction down to 1.0176. The upward trend from 0.9534 remains intact and may be ready to continue. A decisive break above 1.1274 would target the 100% projection from the movement of 0.9534 to 1.1274, applied to the low of 1.0176, which is located at 1.1916. This scenario would propel the EUR/USD pair through a multi-decade channel resistance, indicating a larger bullish trend. For this bullish outlook to hold, the support level at 1.0531 must remain intact.

Looking at the long-term perspective, signs of a potential long-term bullish reversal seem to be forming. A sustained breakout of the falling channel resistance, presently around 1.1377, would support the view that the downtrend that began from the 2008 high of 1.6039 has concluded at the low of 0.9534. This could signal the onset of a medium-term upward trend, even while a corrective pullback might still occur. However, if the channel resistance keeps rejecting price movements, it would sustain a bearish outlook for the pair.

EUR/USD, Outlook, Analysis