Introduction
The Euro FX futures (6E) continue to trade above support, holding gains after forming a bullish divergence at the lows. Price remains in a short-term recovery phase, but the 1.0580 – 1.0630 resistance zone and the 100-day VWMA (1.0581) are capping upside momentum.
As of today, 6E is trading at 1.04585, up +0.19%, with buyers attempting to extend the rebound. A sustained move above 1.0580 would open the door for a stronger recovery, while failure here could lead to another test of 1.0337 or lower.
Market Drivers & Key News Events
- U.S. Dollar Strength Remains a Factor: The dollar has been resilient, supported by sticky inflation data and uncertainty over the Fed’s rate-cut timeline. While markets still expect rate cuts later in 2025, any shift in expectations could impact the euro’s ability to hold gains.
- ECB Policy Outlook: The European Central Bank has maintained a cautious stance, with no clear signals of near-term rate cuts. Any shift in rhetoric could add volatility.
- Global Risk Sentiment: Equity markets and broader risk assets remain stable, supporting demand for the euro, but any sudden shift in sentiment could lead to renewed pressure.
Technical Outlook
Higher Lows Holding—But Resistance in Focus
- The euro has formed a higher low near 1.0210, confirming the bullish divergence seen in RSI from the previous analysis.
- The 100-day VWMA (1.0581) and the 1.0580 – 1.0630 resistance zone remain the key upside hurdle.
- The RSI remains above trendline support, indicating that momentum has not yet reversed downward.
Key Support & Resistance Levels
- Resistance Levels:
- 1.0581 (100-day VWMA – Key Resistance)
- 1.0630 (Major Supply Zone – Needs to Break for Further Upside)
- Support Levels:
- 1.0337 (Short-term support – Must Hold for Bulls)
- 1.0208 (Stronger Demand Zone – Breakdown Below Would Shift Structure Bearish)
A break above 1.0630 would confirm a broader trend shift, while failure at resistance increases the likelihood of a retest of 1.0337 or lower.
Momentum & Market Sentiment
- 100-Day VWMA (1.0581) remains the key trend barrier—a break above this would add confirmation for bulls.
- RSI continues to trend higher, supporting the short-term recovery.
- Price remains above key support levels, keeping the bullish structure intact for now.
The momentum shift from January remains valid, but buyers need to push past resistance to confirm the next leg higher.
Bull & Bear Scenarios
Bull Case: Breakout Above 1.0581 – 1.0630
- A move above 1.0581 (VWMA) would increase upside momentum.
- Clearing 1.0630 would open the door for a move toward 1.0750 or higher.
Bear Case: Another Rejection & Retest of Lows
- Failure to break resistance could lead to a pullback toward 1.0337.
- A break below 1.0208 would negate the bullish structure, increasing downside risk.
Final Outlook
- Short-Term (1-2 Weeks): Neutral to bullish, watching resistance at 1.0581 – 1.0630.
- Medium-Term (1-3 Months): Bullish above 1.0337, but needs a breakout confirmation.
- Long-Term (6+ Months): Bearish unless price reclaims 1.0630+ sustainably.
