Title: EUR/USD Bears Regain Control: Key Support Level Could Spur Further Declines
Source: Originally published by IG Group via TheTradable.com
Author: Peter Nurse
The EUR/USD currency pair is showing increasingly bearish sentiment, suggesting that sellers are slowly gaining dominance over the market. After attempts at recovery, the euro is once again under pressure against a broadly resilient US dollar. Mounting technical pressures and evolving macroeconomic fundamentals are pushing the pair closer to a critical support zone. A decisive breach of this level could accelerate selling momentum and drive the pair into a steeper decline.
Peter Nurse from TheTradable originally outlined these developments, citing the importance of technical indicators and broader risk sentiment in influencing the FX outlook. As market participants brace for key economic data releases and central bank commentary, traders should prepare for heightened volatility in the days ahead.
EUR/USD Recent Performance and Market Sentiment
The euro-dollar pair has been experiencing a steady decline, with risk-averse investor sentiment and stronger US macro fundamentals providing continuous support to the greenback. Multiple failed attempts to sustain gains above 1.09 have exposed the pair to renewed downside risks. Recent price action reflects market skepticism regarding the eurozone’s economic resilience and the European Central Bank’s (ECB) ability to return to a more hawkish stance in the near term.
Key drivers of the recent decline include:
– Hawkish signals from the US Federal Reserve coupled with strong labor market data
– Weaker-than-expected eurozone manufacturing activity
– Sluggish German economic recovery prospects
– Rising US treasury yields, attracting capital away from riskier currencies
Technical Breakdown: Major Support in Focus
EUR/USD has retreated from its recent highs near 1.09 and is now testing lower bounds of its short-term trading range. According to technical charts, the pair is nearing a significant support threshold in the 1.0750–1.0770 region. This level has previously acted as a pivot point, containing near-term selling waves and triggering temporary rebounds.
However, current price movements suggest that bears now have the upper hand. A convincing break below this crucial support band could pave the way for further downside, with the next immediate target zone around 1.0650.
Experts point to the following technical signals:
– The pair remains below its 50-day moving average, highlighting prevailing bearish trends
– The Relative Strength Index (RSI) has fallen below 50, signaling a loss of bullish momentum
– Momentum indicators continue to favor declining price action
Market technicians are closely monitoring the 1.0750 level. A decisive breach of this could lead to acceleration in bearish sentiment, potentially triggering an extended drop toward the 1.0650 psychological support level, followed by 1.0600.
Bullish Triggers Limited Amid Economic Uncertainty
While some investors previously anticipated a euro rebound following dovish tones from the Federal Reserve, that optimism has since faded. The US economy continues to display resilience, with nonfarm payroll data and consumer spending remaining robust. At the same time, the Federal Reserve has pushed back on expectations of aggressive rate cuts, reinforcing the dollar’s appeal.
Conversely, the eurozone continues to struggle with headwinds:
– Stalling German industrial production and slowing sentiment indicators
– Persistent energy price pressures, particularly for eurozone manufacturing hubs
– Expectations of ECB rate stagnation or possible further cuts
Euro bulls have found little ground on which to build confidence. Weak fundamentals, limited policy support, and deteriorating investor sentiment all compound risk for further declines.
Trading Volume and Volatility Outlook
Recent market sessions have seen a surge in trading volume around the euro-dollar pair, especially near support zones. Large institutional investors appear to be positioning for a potential downside breakout, further reinforcing bearish expectations. Options markets are also pricing in greater volatility, particularly ahead of key US economic releases and central bank communications in the coming days.
The volatility outlook for EUR/USD in the near term is being shaped by:
– Anticipated US
Read more on EUR/USD trading.