EUR/USD is hitting key retracement levels after its sharp drop last week!
Will this lead to a break-and-retest situation for the euro in the next few days?
We’re taking a closer look at the 4-hour time frame:
EUR/USD 4-hour Forex Chart by TradingView
Uncle Sam’s weak jobs data, Trump’s firing of the BLS commissioner, and FOMC member Adriana Kugler’s unexpected resignation have raised the odds of a Fed rate cut as early as September, weighing on U.S. dollar demand.
That said, global growth worries and the pressure from a high-tariff backdrop are keeping a lid on gains for “risk” currencies like the euro. Dollar demand could still pick up if those macro concerns deepen and traders soon head for safety.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Growth concerns tied to a shaky US-EU trade deal framework dragged EUR/USD lower last week, pulling the pair down from 1.1800 to 1.1400. Buyers stepped in at that key psychological level, and the pair has since bounced back toward the 1.1550 zone, which lines up with the Pivot Point at 1.1582 and the 50% Fibonacci retracement of last week’s drop.
Price is now hovering near a broken trend line support and a bearish SMA crossover, both of which point to a possible trend shift. If the pair struggles to hold above 1.1550, it could slip back toward the 1.1400 lows or even chart fresh August lows.
On the flip side, a clean break above 1.1650 and a move past the trend line could put EUR/USD back on track toward the 1.1700 and 1.1800 resistance zones tied to the broader uptrend.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
