Technical Analysis
Bullish Structure Intact
The Euro surged from below 1.08 in Q1 to above 1.16 in mid-April, breaking through several key resistance levels. The most recent pullback appears to have:
- Found support at the 50-day moving average (~1.1120)
- Held above the 1.11 pivot zone, which overlaps with March breakout levels
Resistance and Key Levels
The key technical battlegrounds now are:
- Resistance zone: 1.1275–1.1300 (current price sitting just above this pivot)
- Major breakout level: 1.1613 (R1)
- Support zone: 1.1120 (50-day MA and former resistance)
- Deeper support: 1.0932 (S1 pivot)
A daily close above 1.1300 would shift momentum strongly back in the bulls’ favor and validate the uptrend continuation.
Levels to Watch
| Zone | Price | Notes |
|---|---|---|
| Resistance | 1.1275–1.1300 | Local pivot and breakout test zone |
| Resistance | 1.1613 | April highs and R1 level |
| Support | 1.1120 | 50-day MA and demand area |
| Support | 1.0932 | Pivot S1 and structural breakout retest |
Macro Context
Driving Forces Behind the Euro’s Strength
- Weakening USD: Recent softness in the U.S. dollar due to falling bond yields, increasing recession concerns, and hints of a Fed policy pivot later this year.
- Hawkish ECB: European inflation data remains sticky, keeping the ECB in a tightening stance longer than the Fed.
- Interest rate differentials continue to tilt in favor of the Eurozone, especially against the backdrop of potential rate cuts in the U.S.
Risks
- Any dovish shift from the ECB, or
- A surprise rebound in U.S. economic data, or hawkish Fed repricing could quickly unwind recent gains.
Technical Scenarios
Bullish Case
- Today’s bounce marks the end of the correction
- Price reclaims 1.1300 and builds momentum toward 1.1613, possibly higher
- Momentum (RSI) continues to strengthen above 55
- Macro narrative stays supportive (EUR rate differentials, USD weakness)
Bearish Case
- Price fails to reclaim 1.13, forming lower high
- RSI flattens and rolls over below 55
- Breakdown below 1.1120 opens path to 1.0930 and retest of 200MA near 1.08
Outlook
| Timeframe | Bias | Viewpoint |
|---|---|---|
| Short-term | Neutral-Bullish | Bounce off support gaining traction |
| Medium-term | Bullish | Above 50/200 MAs and structural breakout holds |
| Long-term | Bullish | Higher lows and higher highs developing |
Final Thoughts
The Euro is attempting a bullish retest following an impulsive March–April rally. The technical structure remains sound, and if today’s bounce holds, we could see a continuation toward the 1.16 target in the coming weeks.
Watch the 1.1275–1.1300 zone closely – this is the line in the sand for short-term directional bias.
