The Euro USD dropped on Monday after testing the key resistance at 1.1280 on Friday. I discussed this level in last week’s analysis and again in the weekly forex forecast.
Last Thursday’s breakdown below the March trend line flipped the level to new resistance. However, shorting the euro on Friday was risky for several reasons.
EURUSD 2-week time frame:
First, entering a new trade ahead of the weekend is always risky. That’s especially true with this year’s increase in volatility.
Second, shorting the euro into 1.1200 support could easily backfire, given the levels’ significance since August of last year.
With today’s breakdown, the EURUSD looks to be entering a new range. A sustained break below 1.1200 flips the level to new resistance. From there, 1.0930 is the range low with a 1.1080 mid-range.
That said, the April highs at 1.1080 will likely attract buyers. We’ve seen a slight bounce already in the morning session. But there’s no reason to be a buyer while below 1.1200.
Pay close attention to where EURUSD closes this week. A weekly close below 1.1200 would secure a buy-side fakeout. As outlined in the free fakeout PDF, that would open the door to lower levels later this month.
Any sustained break back above 1.1200 and 1.1275 would reestablish the uptrend. So, keep these levels on your radar and watch how the high time frames react to them.
For the DXY, 101.80 is significant for several reasons. It’s a confluence of resistance based on the descending channel resistance from February and the horizontal resistance from September 2024.
A pullback from the DXY from the 101.80 region seems likely, while a sustained break above it on the high time frames would open up 103.40.
EURUSD daily time frame:
