The euro is behaving as anticipated by every desk the moment the Fed minutes were released on Wednesday afternoon: it is rolling, lacking any fundamental support to bolster its position. EUR/USD is currently positioned at $1.15906, reflecting a decline of 0.27%-0.28%. This movement follows a classic rejection at the resistance range of $1.1640-$1.1655 and a definitive breach of the multi-week ascending trendline, with its lower boundary located at $1.1650. The Wednesday bounce from the $1.1585-$1.1580 zone – the lowest print since April 7 – sustained into Thursday’s Asian session. However, Europe’s PMI miss and a resurgence of dollar strength transformed the corrective rebound into a continuation lower. The market has now breached the structural 1:1 uptrend on the daily chart, indicating that the path of least resistance suggests a significant retest of the $1.15 level if $1.1580 does not hold on a daily close. This is not a favourable setup for the euro, exhibiting some instability. This is a dollar-bullish regime that the euro has yet to navigate successfully. The intraday print for EUR/USD is $1.15906, with $1.15914 as the spot quote on the Asian close and $1.1628 trading on the FXEmpire 2-hour read earlier in the U.S. session. The pair reached a low of $1.1580-$1.1585 overnight, rebounded to $1.16, and is currently making its way back toward that support level. The monthly high is positioned at $1.172, while the upper resistance band is established between $1.163 and $1.166. The immediate support at $1.1591 aligns with the 61.8% Fibonacci retracement of the March-April upswing. Below that, the 78.6% Fib at $1.1522 presents an opportunity, with the structural floor at $1.1433 serving as the next significant downside reference. The technical compression here is significant – a narrow $0.0050 range between $1.16 and $1.155 encapsulates the entire near-term narrative.
The Overbalance methodology indicated this Wednesday that EUR/USD has breached the 1:1 ascending trendline, with its lower boundary positioned at $1.1650. That is not a trivial indication. The 1:1 channel that characterised the entire April-May recovery has now failed, and the technical convention is clear – when a clean ascending channel breaks, the structure shifts from buy-the-dip to sell-the-rally until the price consistently closes back above the broken trendline. Wednesday’s bounce from $1.1580 represented the initial examination of the previously broken structure from beneath, yet it was unable to regain its position. Every retest from the underside that fails to push back through serves as further validation that the regime has shifted. Immediate resistance is observed at the 50% Fibonacci retracement level of $1.1640. Above that, the 38.2% Fibonacci level is located near $1.1689. The 200-period SMA on the 4-hour chart is positioned at $1.1712. The 23.6% retracement at $1.1749 reinforces the dense supply zone overhead. The descending red 50-period moving average on the 2-hour at $1.166 is currently serving as immediate dynamic resistance, while the broken trendline at $1.1650 has transitioned from a supportive floor to a challenging ceiling. There are five distinct supply layers positioned between the current price and $1.175, indicating that there is no straightforward route upward in any scenario. The responsibility lies with the bulls to sequentially overcome each of these barriers.
The downside map exhibits a disconcerting symmetry. A daily close below $1.1580 – which is the April 7 low and the floor of the current bounce zone – would quickly lead to the 78.6% Fibonacci level at $1.1522. Below $1.1522, the structural floor at $1.1433 serves as the next line of defence. A sustained break of $1.1433 alters the entire medium-term outlook and re-establishes the bearish multi-week trend that seemed to have lost momentum during the April rally. The cascade math presents challenges: $1.16 to $1.1433 represents approximately 1.4%. While this may not seem significant at first glance, it is essential to consider the context of FX volatility for a pair of this magnitude – such a shift can lead to multi-day movements that impact position books considerably. The 14-period RSI on the 4-hour chart is currently positioned in the low 40s, reflecting a typical scenario of muted bullish momentum within a prevailing downtrend. It does not indicate an oversold condition sufficient to signal a contrarian bounce, nor does it provide a positive indication that buying pressure is returning. On the 2-hour chart, the RSI is currently positioned below 48 and is showing a downward trend. The MACD (12, 26, 9) is stabilising just above the zero line with modest positive readings, indicating that the recent downside pressure is easing in pace, though it is not reversing in direction. That represents a “less bearish” signal, rather than a “bullish” signal – and it’s important to note the significant distinction.
The 4-hour structure indicates a clear bearish trend beneath the 200-period SMA and the 50% Fibonacci retracement of the March-April leg. Heavy selling has been documented in the $1.164 zone, with lower highs forming under that ceiling – the classic distribution pattern that precedes breakdowns. Bearish rejection wicks are accumulating at the moving-average cluster between $1.166 and $1.168, indicating that supply remains patient while demand appears weak. The strength of the dollar is contributing significantly, accounting for 80% of the overall impact. This isn’t primarily a story about the euro. It revolves around the dollar. The DXY surged past $99.13, characterised by green engulfing candles, successfully breaking out of a descending channel and entering a new ascending channel with established higher highs and higher lows. Above $98.94, the structure indicates a strong bullish sentiment. The Fibonacci extension targets are positioned at $99.48 and $99.66, while structural support is identified at $98.90. The 14-period RSI on the dollar index is currently above 55 and shows no signs of being overextended, indicating that there is potential for the rally to continue before any mean-reversion signal is activated. The greenback demonstrated its strength this week, gaining against the Australian dollar (+0.31%) and showing positive movement against all G10 currencies, with the exception of the British pound. The GBP/USD pair has been maintaining the $1.3445 channel floor. When the dollar exhibits this kind of momentum, structure, and breadth throughout the G10, EUR/USD is contending with the overarching trends of the FX landscape, rather than merely responding to a singular negative euro headline. That asymmetry holds significant importance for positioning.
Wednesday’s FOMC minutes served as the key macroeconomic indicator. The majority of Federal Reserve officials indicated their willingness to support an increase in interest rates should inflation remain consistently above the 2% target. This marks the second consecutive meeting in which a greater number of policymakers have adopted a hawkish stance regarding conditional rate hikes compared to cuts. The regime shift is indeed a reality. The rate market has responded as expected: bets on rate cuts have diminished significantly, the likelihood of a Fed rate hike in 2026 is currently estimated between 52% and 62% based on varying data sources, and the curve is now reflecting expectations of tightening rather than easing. That single shift is sufficient to maintain DXY’s strength and keep EUR/USD under pressure, irrespective of Europe’s forthcoming actions. The April CPI print exceeded expectations, driven by persistent shelter costs and a resurgence in energy inflation. The Fed minutes have essentially validated the bond market’s positioning over the past two weeks: the anticipated cutting cycle that markets were heavily betting on for March-April is currently paused, and the next directional shift from the Fed is more inclined to be a hold-into-hike rather than a hold-into-cut. That is the most euro-bearish piece of macro to land in this cycle.