Is it finally time to look for EURUSD shorts? The euro has trended higher throughout the year, but this week’s price action could alter the trend.
Get the details in today’s video, including key levels and potential targets. Also, get the latest on the US Dollar Index (DXY).
EURUSD Forecast
The euro is looking heavy after failing to break through resistance near 1.1900 last week. That level was always going to be tough, and sure enough, sellers stepped in.
The bigger picture stems from the channel that has been in play since 2022. The euro tested the top of that channel, failed to hold above 1.1830 last week, and is rotating lower this week.
The key level now is the trend line off the February low. That support has held several times, and the euro is sitting right on it again.
As long as buyers keep the pair above that line, EURUSD remains range-bound, with resistance at 1.1830.
A daily close below 1.1740 would confirm the breakdown. That would open at 1.1560, and possibly the imbalance at 1.1440.
Until then, shorts are risky. The safer approach is to wait for the market to confirm the break below 1.1740.
DXY Forecast
The dollar index is bouncing from a significant level after last week’s FOMC. The 96.60 area is the 2011 channel support that also triggered a bounce in early July.
However, the DXY failed to close above 97.70 last week. That left the level intact as resistance to start this week.
If DXY holds above 97.70, the next levels are 98.60 and potentially 99.80. If dollar bulls can’t break 97.70 this week, the index remains range-bound.
Given the price action on Wednesday, I’m leaning toward a bullish move from the DXY.
A break above 97.70 combined with the EURUSD below 1.1740 on the high time frames could offer a high-conviction setup.
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