EUR/USD is currently positioned between 1.1730 and 1.1750 following a notable rebound from the 1.1575 to 1.1590 range. The recent bounce has disrupted a short descending channel observed on both the 4-hour and daily charts, effectively transforming the structure into a rising short-term trend. The current price is situated just beneath the 1.1760–1.1769 range, marking the upper limit of the recent channel and serving as a distinct resistance level. The next upside checkpoints are the three-month high at 1.1808 and the 1.1918 zone. On the downside, 1.1695 and 1.1672 represent immediate demand, as they align with a nine-day EMA, the 50-day EMA, and significant Fibonacci retracement levels. Provided that EUR/USD remains above 1.1695–1.1672 and does not breach 1.1589, the outlook continues to favor additional upward movement rather than a downward shift. The essential context is heavily influenced by US political dynamics and the actions of the Federal Reserve. Trump’s tariff threats directed at Europe concerning the Greenland dispute initially impacted market sentiment but ultimately contributed to the narrative of a weaker dollar that he seeks to promote. The USD sell-off picked up pace following the announcement of potential additional European tariffs over the weekend, but then saw a partial easing as a “framework” agreement regarding Greenland and NATO cooperation was revealed, which included the elimination of a 10% tariff on several EU nations. The sequence maintained the dollar index in the 98.25–98.50 range rather than allowing it to rebound towards 99.50, and this weaker dollar facilitated the rise of EUR/USD from approximately 1.1580 back into the 1.17s. Simultaneously, there is uncertainty in the markets regarding the leadership of the Fed and the intensity of the forthcoming easing cycle. The latest figures indicate weekly jobless claims at approximately 200,000, with a four-week average close to 201,500 and continuing claims hovering around 1.849 million. These numbers reflect a robust labor market; however, the combination of marginally weaker data and political influence on the Federal Reserve sustains rate-cut expectations and limits any significant recovery of the USD. For EUR/USD, the interplay of political noise, uncertainty surrounding the Fed, and only moderate resilience in US data suggests that the most likely direction remains upward rather than reverting to 1.15.
On the Euro side, the primary narrative is stabilization, rather than acceleration. The Flash HCOB services PMI at 51.6 indicates modest expansion, aligning perfectly with expectations, while the manufacturing PMI increased from 48.8 to approximately 49.4. The observed improvement holds statistical significance; however, it maintains the factory sector within contraction territory, remaining below the threshold of 50. Germany exhibits a comparable trend, with services PMI at approximately 53.3 and manufacturing close to 48.7, indicating that the largest economy in the Eurozone is gradually recovering while still contending with industrial challenges. This collection of figures illustrates the reasons behind the EUR/USD’s ascent from the 1.15–1.16 lows without experiencing a significant downturn, while also highlighting the challenges the pair faces in breaking through the 1.18–1.19 resistance level. The Euro possesses sufficient fundamental backing to sustain a valuation in the range of 1.17–1.18, as the dollar faces political and policy challenges. However, it does not have the growth and inflation narrative required for a decisive move beyond 1.20. The daily chart indicates that EUR/USD is maintaining its position above the nine-day EMA at approximately 1.1695 and the 50-day EMA near 1.1678. Both moving averages are trending upward, with the shorter EMA situated above the longer one, indicating a bullish short-term structure. The previous descending channel has been breached upwards, and the price is currently examining its former upper boundary around 1.1760 from a lower position. The 14-day RSI positioned around 58–60 indicates a neutral-to-bullish momentum profile: the indicator has retreated from overbought levels but stays comfortably above the 50 line, suggesting a phase of consolidation following a significant upward movement rather than a distribution at the peak. On the 4-hour chart, the rebound from 1.1577 has established a new ascending channel. Initial resistance is observed between 1.1760 and 1.1769, followed by a level at 1.1808, and further up at 1.1918, marking the peak since mid-2021. Immediate support is concentrated at 1.1723, which aligns with the 23.6% Fibonacci retracement of the most recent movement. This is succeeded by a confluence zone around 1.1695–1.1672, incorporating the 38.2% and 50% retracements alongside the significant EMAs. Provided that the demand band remains intact, any decline into the high 1.16s appears to be more of a buyable correction rather than the onset of a new bearish trend.
One year prior, the prevailing consensus was fixated on parity calls following the EUR/USD’s formation of a higher low just above the 1.0200 level, amidst a backdrop of significant pessimism regarding the Eurozone economy. Since that turning point, the pair has shown an upward trajectory, establishing the 1.0200 low and the 1.1492 region as key structural supports on the weekly chart. The price action observed in the past five months illustrates a classic digestion pattern: lower highs and higher lows creating a symmetrical triangle. Considering the preceding bullish momentum from 1.02 to above 1.17, this pattern is more accurately interpreted as a bull pennant rather than a neutral consolidation. The efforts to push EUR/USD lower have repeatedly faltered above the prior significant low, as buyers have reliably upheld support levels such as 1.1593 and 1.1589. Donald Trump’s ongoing advocacy for a weaker dollar – through tariffs, criticism of the Federal Reserve, and unexpected weekend announcements – has hindered the USD from continuing its previous rally, thereby facilitating this consolidation. The market currently finds itself in a situation where a relatively modest catalyst from either direction (a significant enhancement in Euro data or a more assertive Fed easing narrative) could lead to an upward resolution from this pennant, rather than reverting to the previous parity narrative. In the short-term, intraday movements indicate that EUR/USD is adhering to a narrow range of 1.1730–1.1769. The price has repeatedly tested above 1.1750; however, the long upper wicks near 1.1769 indicate ongoing supply in that area, aligning with a previous swing high and intraday resistance. Concurrently, buyers consistently enter the market in the range of 1.1695–1.1725, where the ascending trendline, significant Fibonacci levels, and EMAs intersect. This forms a rising triangle pattern on the intraday charts: flat resistance above at 1.1760–1.1769 and ascending support below. Rising triangles following a previous advance typically serve as continuation patterns, suggesting a potential topside break after the market processes the latest data and the associated Fed event risk. The RSI on the 2-hour and 4-hour charts remains around 60, indicating that the pair is not in an overbought or exhausted state, but is instead building momentum for the next movement.
In the near term, the primary catalysts include the Federal Reserve’s rate decision and US inflation data, in addition to releases from the Eurozone. Markets are anticipating a hold within the 3.50%–3.75% range at the upcoming Fed meeting; however, the focus will be on the tone regarding potential future cuts. Any indication that rate cuts may occur sooner or more forcefully than anticipated will lead to a decline in yields and likely propel EUR/USD above 1.1769, moving towards 1.1808 or even 1.1918. On the other hand, if the Fed pushes back and PCE inflation comes in stronger than anticipated, this would bolster the dollar and challenge the Euro’s strength at 1.1695 and 1.1672. In Europe, any additional gains in PMIs or unexpected positive results in hard data such as industrial production or retail sales would strengthen the notion that the most severe phase of the slowdown is over, facilitating the pair’s ability to maintain pricing above 1.17. Subpar data would not necessarily disrupt the prevailing uptrend; however, it would complicate any advance beyond 1.18 and render EUR/USD more susceptible to fluctuations in the USD.
Considering the technical structure, macro backdrop, and sentiment collectively, the evidence leans towards a bullish-to-constructive outlook on EUR/USD at the present levels. The dollar index is currently positioned in the 98.25–98.50 range, failing to reclaim the 99+ level. The political pressure on the Fed, coupled with the gradual stabilization in Eurozone PMIs, reinforces the notion that pullbacks toward 1.1695–1.1672 present opportunities for long positions rather than signals to short. A logical strategy involves considering 1.1695 as the main support level and 1.1645 as the critical threshold: provided that EUR/USD remains above this range, the analysis suggests capitalizing on any weakness toward the upper-1.16s, with initial upside targets set at 1.1760–1.1769, followed by 1.1808. A clean daily close above 1.1808 would pave the way toward 1.1918 and reintroduce the 1.20 psychological level into consideration. A decisive break back below 1.1589 and the lower boundary of the broader triangle would shift the perspective to bearish. Until that occurs, the pair continues to be a buy-on-dips opportunity instead of a sell, and the risk-reward dynamics support a positive outlook on EUR/USD rather than retreating from this upward movement.