EUR/USD is currently positioned between 1.1720 and 1.1750, having halted a four-day decline and gaining momentum as liquidity increases in the Christmas week. The pair is not experiencing an upward movement based on optimism. The market is experiencing a rally driven by a combination of factors: a softer USD tone, adjustments in the rate path, and positioning ahead of Tuesday’s US data amidst thinner risk limits. The essential takeaway is straightforward: above 1.1700, the bulls continue to dominate the structure. Below that zone, the chart becomes less accommodating. The specific level range presents a heightened risk due to the close proximity of the decision points. The nearest critical levels are closely aligned: 1.1713 (short EMA support) is positioned nearly on the channel floor at 1.1710, while the subsequent key level below is the 50-day EMA at 1.1648. In conditions of low liquidity, prices frequently transition from one level to another with little trading activity occurring in between.
On the daily read, the 14-day RSI at 61.63 is a significant indicator. The data clearly indicates that upward momentum continues to be present. An RSI above 60 typically sustains dip-buying activity, as it indicates that buyers continue to protect pullbacks instead of selling into strength. A distinct analysis from another department indicated that RSI is positioned near 59, aligning with the sentiment of being “bullish but not euphoric.” The two figures are not in opposition. The analysis presents a similar situation with variations in timing and perspective: momentum shows a positive trend, yet it has not reached the levels that would trigger a significant mean reversion. The prevailing technical framework is characterized by an upward channel. The EUR/USD pair continues to maintain a position just above the ascending structure, which supports an upward trend bias, provided that the channel floor remains intact. That is significant because in trending markets, the channel boundary is not considered “support.” The market has identified this as its favored re-entry zone.
If the pair loses the channel, the move will not be considered “a small break.” The playbook transitions from trend continuation to trend repair, indicating a market shift towards moving averages such as 1.1648 and subsequently deeper reference lows. The short-term trend stack remains favorable: the nine-day EMA is on an upward trajectory and continues to stay above the 50-day EMA, maintaining a bullish bias. As long as EUR/USD stays above both, the market indicates that pullbacks are corrective rather than the beginning of a reversal leg. The significance of the 1.1713 area is greater than it may initially appear. It represents more than a mere figure. The current position represents the forefront of the bullish moving-average “support belt,” coinciding with the channel floor near 1.1710. When two independent tools converge in the same zone, the price typically responds with significant force. The upside targets are established based on distinct clustering patterns. The initial target is set at 1.1800, which represents a significant psychological level. The specified level corresponds with the two-month peak of 1.1804 recorded on December 16. The combination of these factors explains why bulls continue to focus on it: the psychological aspect combined with a recent swing high indicates where stops are positioned, where breakout orders accumulate, and where momentum traders seek validation.
Should EUR/USD successfully breach that resistance zone, the subsequent trend indicator is the channel peak around 1.1860. Furthermore, the chart’s subsequent significant historical milestone is 1.1918, noted as the peak level since June 2021. That is the zone where the market ceases to regard the rally as “a move” and begins to perceive it as a regime. The immediate support levels are clearly established: 1.1713 (nine-day EMA) and approximately 1.1710 (channel base). If that area holds, the trend stays intact, and dips continue to be buyable. If that level is breached, the subsequent support is the 50-day EMA at 1.1648. That is not discretionary support. Trend followers typically evaluate whether the movement remains characterized as a “uptrend with pullback” or has transitioned into a “failed breakout.” The subsequent significant benchmark is 1.1589, marking the three-week low recorded on December 1. If the price reaches that point, the narrative shifts. The market would be acknowledging that the entire post-mid-month rebound has not succeeded, and the pair has returned to a more pronounced mean-reversion zone. A distinct framework identifies 1.1680, 1.1600, and 1.1550 as key support levels, while 1.1770, 1.1830, and 1.1900 are marked as significant resistance levels. The identified levels align coherently within the same framework: the 1.1680–1.1710 range serves as the initial support zone; the 1.1830–1.1900 range is critical for determining whether the subsequent breakout phase will validate or falter. The US Dollar Index declining toward 98.60 warrants attention beyond mere background noise. The probability distribution for EUR/USD is shaped by this factor. The market is positioning itself ahead of Tuesday’s US Q3 GDP release, anticipated to be approximately 3.8%, compared to the previous estimate of 3.2%. In standard liquidity, that represents a clear directional signal. During the holiday season, liquidity may serve as a catalyst for volatility.