EUR/USD Stalls Out and May be Prepping for a Short-term Correction

EUR/USD Forecast Video for 17.01.23 by Bruce Powers

An attempted breakout to a new trend high occurred in the EUR/USD on Monday. It reached a price of 1.0874, just five pips above last week’s high of 1.0869. However, upward momentum quickly failed at that point and the pair spent most of the rest of the session falling. At the time of this writing, it looks like the EUR/USD may close near the lows of the session, which puts it on target for further declines in the short-term.

Lower Price Support

Further price decay will see the EUR/USD heading first towards Friday’s low at 1.0780, followed by last Thursday’s low at 1.0727. If weakness continues after that we could see it move into a deeper correction, possibly down to the lower parallel trend channel line or the 35-Day EMA (orange), now at 1.0595.

Before that lower channel is hit there is possible weekly support 1.0637. That price level can be combined with the 61.8% Fibonacci retracement of the short-term uptrend at 1.0633. Together, they create a potential support range from 1.0637 to 1.0633.

Trend Indicator Support

The 34-Day EMA was tested as support at the most recent swing low. It held and price rallied off that area to a new trend high. Since the EUR/USD reacted to that price area it should be watched going forward as it can be trend support again. Although it may not be reached, it could be. It becomes increasingly likely following a decline below 1.0780, or at least the lower channel line can be touched.

Higher Targets That May Eventually Be Reached

Nevertheless, the uptrend off the late-September low remains well intact with a series of higher swing highs and higher swing lows. If a deeper correction does come in the near-term the EUR/USD should resume its advance once it is over.

Two key higher targets are the 50% retracement of the full downtrend at 1.0843, followed by the 78.6% retracement of the internal downtrend at 1.1075. It is certainly possible that the pair eventually reaches the 61.8% Fibonacci retracement at 1.1275. That higher target is strengthened in significance as a Fibonacci 78.6% projection identifies that price area, as well as a symmetrical swing completes nearby at 1.1292.

The first rally that was looked for symmetry with the current leg up is eight days up from the November 3, 2022, swing low where price advanced by 7.73%. A similar move off the swing low from six days ago would put the EUR/USD at 1.1292.

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