Title: EUR/USD Rebounds After Hitting New Lows and Failing to Sustain Break Below Key Support
By Adam Button (Original author credit: Adam Button, ForexLive.com)
The EUR/USD currency pair has recently demonstrated considerable volatility following a fresh decline to new 2024 lows. Despite a strong initial move lower, bears failed to maintain pressure beneath key technical support which ultimately led to a robust intraday bounce. This reversal speaks to the underlying uncertainty in the market, underpinned by mixed economic data and evolving expectations regarding central bank policy decisions from both the European Central Bank (ECB) and the U.S. Federal Reserve.
This article provides an in-depth analysis of recent EUR/USD price action, technical levels of importance, investor sentiment, and macroeconomic factors influencing the trajectory of the euro-dollar exchange rate. Insights are derived from the original commentary provided by Adam Button for ForexLive, expanded and structured for comprehensive understanding.
Key Themes Covered:
– Intraday performance and technical analysis of EUR/USD
– Areas of key chart support and resistance
– The role of fundamentals in recent moves
– Central bank divergence: Fed vs ECB
– Market sentiment and positioning outlook
Intraday Price Action: Sell-off Followed by Rebound
On July 16th, the EUR/USD began trading with bearish momentum, extending losses and marking new lows for the year. This depreciation took the pair below a significant support target that had previously acted as a floor. However, the breakout was short-lived. Buyers stepped in, specifically around the 1.0840 region, resulting in a quick reversal that erased the earlier downside move.
Highlights from the trading session:
– EUR/USD tested fresh 2024 lows amid sustained USD strength
– Price dipped under the key level of 1.0840, a zone closely watched by technical traders
– Support at that level had previously held during earlier market tests but appeared to fail momentarily
– The downside breach attracted fresh buying interest, triggering a rapid 30+ pip rebound
– Recovery took the pair back above prior support, transforming it into a potential near-term base
This price behavior suggests a classic failed breakdown pattern. From a technical trading standpoint, failed breaks often result in aggressive countertrend moves — and that is precisely what followed on this occasion. Traders who had positioned short expecting a deeper decline rushed to cover as support reasserted itself.
Technical Outlook: Key Levels in Play
The technical landscape of the EUR/USD highlights several critical price zones that traders are closely watching. These levels not only reflect prior turning points in the market but also influence algorithmic and institutional flow.
Key levels cited based on the chart structure:
– Support at 1.0840: Previously tested and held earlier in the year, provided a clear pivot for the recent rebound
– Resistance around 1.0900: Psychological barrier and previous highs from early July
– Further upside resistance could emerge near 1.0950
– Intermediate support zones tied to hourly trendlines are clustered just above the 1.0850-1.0870 area
– Below 1.0840, next significant downside support can be found near 1.0790 and then 1.0730
These chart levels define the operative playing field in the short-term EUR/USD landscape. The reaction at 1.0840 enhances its importance going forward; a daily close below could genuinely open the door to increased bearish momentum. However, the intraday bounce hints at light positioning and a hesitancy on the part of traders to fully commit to dollar strength.
Fundamental Drivers: Data Surprises and Policy Divergence
While much of the market’s recent focus has been on near-term fluctuations in price, the underlying story for EUR/USD lies in macroeconomic data and central bank policy direction — particularly relative trends between the Federal Reserve and the ECB.
Recent economic developments affecting sentiment include:
– U.S. inflation data has started showing signs of easing, particularly the June CPI report, which
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