Article Rewrite Based on Original Analysis by ActionForex.com
Title: EUR/USD Recovery Continues but Upside Faces Resistance Near 1.1650
The EUR/USD currency pair has recently shown signs of recovery from its previous bearish trend. While this upward correction has brought some optimism for Euro bulls, technical indicators and broader market dynamics suggest that this rebound may be limited in its scope. The 1.1650 resistance zone is becoming increasingly significant as a potential barrier to further gains.
According to the original technical analysis posted by ActionForex.com, the current EUR/USD rebound may struggle to gain additional momentum without a significant shift in both technical positioning and macroeconomic backdrop. Below is a comprehensive, detailed outlook of EUR/USD’s current technical setup, fundamental drivers, and potential future movement, as interpreted and expanded from the original work by ActionForex.com’s analyst.
Technical Overview: EUR/USD Bounces Amid Major Downtrend
Price Action:
– EUR/USD has recovered modestly from the recent low of 1.0601.
– The pair had been under persistent bearish pressure for several weeks but has now found tentative support at this key level.
– As of the most recent analysis, EUR/USD was trading near 1.0900, running into resistance on the way up.
Trendline and Structural Resistance:
– A descending trendline from previous highs continues to cap gains.
– The immediate resistance zone lies between 1.0950 and the psychological threshold of 1.1000.
– Above that, a more substantial resistance forms near 1.1150 to 1.1200, a band aligned with mid-March swing highs.
– 1.1650 is marked as a major resistance zone that could cap any notable rally unless there is a sustained bullish shift.
Support and Risk Levels:
– First-line support stands at 1.0810, a level recently tested as both support and resistance.
– Deeper support is noted around 1.0720 and 1.0600, the recent low, below which the bearish trend could resume.
– A break below 1.0600 would likely open the path toward 1.0500 or lower.
Moving Averages:
– The 55-day EMA is currently flattening, suggesting a neutral short-term momentum.
– The 100-day SMA is trending downward, reinforcing the view that EUR/USD is still within a corrective phase rather than a reversal trend.
– The price remains below the 200-day SMA, reflecting the dominance of medium-term bearish pressure.
MACD (Moving Average Convergence Divergence):
– MACD on the daily chart is currently below the signal line but showing signs of convergence.
– Histogram bars are narrowing, indicating possible momentum shift, but confirmation of upward bias is still pending.
RSI (Relative Strength Index):
– RSI has rebounded above 50.0, entering a neutral territory.
– It does not yet confirm a strong bullish momentum; the oscillator needs to move closer to 60–65 to signal strengthening buying interest.
Fibonacci Retracement Analysis:
– The upward rebound has reached near the 38.2 percent Fibonacci retracement level drawn from the 1.1275 high to the 1.0601 low.
– Further resistance is anticipated at the 50 percent level (~1.0938) and the 61.8 percent retracement at approximately 1.1040.
Fundamental Drivers in Focus
Interest Rate Differentials:
– The primary driver behind USD strength in recent months has been the U.S. Federal Reserve’s hawkish policy stance.
– The Fed has signaled a readiness to keep interest rates elevated for an extended period, citing persistent inflationary pressures.
– In contrast, the European Central Bank (ECB) has adopted a more dovish tone, with some policymakers discussing the possibility of eventual rate cuts if inflation shows consistent decline.
Economic Divergence:
– U.S. GDP growth remains significantly more robust than the Eurozone.
– Consumer spending, labor market resilience
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