EUR/USD Price Outlook: Euro Back Above 1.13 – Bull Trap Or Breakout?

Euro has rallied more than 0.6% against the US Dollar today with a reversal back above a critical inflection zone threatening the broader downtrend in price. These are the updated targets and invalidation levels that matter on the EUR/USD charts.

EUR/USD DAILY PRICE CHART

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EUR/USD Price Chart - Euro Daily

Technical Outlook: In my latest EUR/USD Weekly Technical Outlook we noted that the price was testing a break below critical support at the 1.13-handle with a weekly close below needed to keep the short-bias viable. Euro briefly registered a low at 1.1258 today before reversing sharply higher with price poised to post an outside-daily reversal candle.

EUR/USD 120MIN PRICE CHART

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EUR/USD Price Chart - Euro 120min

Notes: A closer look at price action shows Euro breaking above descending channel resistance extending off the monthly highs with the advance now probing through the objective weekly opening-range high at 1.1330. A push higher here keeps the focus on topside objectives at 1.1356 and the 50% retracement/pitchfork resistance at 1.1385/90 – look for a bigger reaction there IF reached with breach targeting 1.1416/20 and the yearly open at 1.1445.

Initial support rests at 1.13 backed by near-term bullish invalidation at the 11/28 swing low at 1.1267- a break below this level would be needed mark resumption of the broader downtrend targeting 1.1233 and 1.1215.

Bottom line: The focus remains on the 1.13-handle for now with the short-bias at risk while above. Ultimately a breach above pitchfork resistance is needed to suggest a more significant low is in place and IF this reversal is legit, intraday losses should be limited to 1.1267. From a trading standpoint, I’ll favor fading weakness while above today’s low targeting the upper parallels. That said, weakness beyond 1.13 should be approached with extreme caution- a weekly close will be the ‘tell’ moving deeper into February trade - tread lightly.

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