Title: EUR/USD Trades Near 1.1520: Key Supply Zones Identified Between 1.1540 to 1.1560
Author Credit: Originally written by Mark Donald for The Tradable
The EUR/USD currency pair is currently trading near the 1.1520 level, marking a significant point in its recent upward trend. This follows a series of gradual gains observed over the past week, as the pair edges closer to a key resistance area outlined between 1.1540 and 1.1560. Market participants remain cautious at these levels as technical indicators signal potential supply pressures ahead, which could either cap the ongoing rally or shift the momentum depending on macroeconomic developments and central bank commentary.
As the pair trades just below a critical resistance threshold, traders and analysts closely examine the underlying conditions supporting the euro’s rise and the potential for a reversal. These developments come amid broader market discussions surrounding inflationary data, European Central Bank (ECB) positioning, and fresh signals from the United States Federal Reserve.
Key Overview of EUR/USD Price Action
– EUR/USD has been on a bullish run over the last few trading sessions, sparking market interest in the 1.1500 pivot area.
– The currency pair is holding steady above short-term support levels, with momentum indicators suggesting waning bullish energy as price approaches a critical supply zone.
– Technical chart patterns show the proximity of resistance at 1.1540 to 1.1560, a region where several selling attempts historically emerged.
– The market is evaluating short-term fundamentals including U.S. inflation data, interest rate outlooks, and upcoming economic forecasts from the ECB.
– The strength of the euro has been aided by improved economic sentiment in the Eurozone, alongside some USD weakness triggered by policy discussions in the U.S.
Technical Analysis Snapshot
The daily chart of EUR/USD displays several important technical features that warrant trader attention:
– Price is testing the 1.1520 level, which holds psychological and historical value, as well as alignment with retracement levels from prior cycles.
– The currency pair is trading comfortably above its 20-day and 50-day simple moving averages (SMA), which have recently crossed in a bullish formation, further reinforcing a positive short-term outlook.
– However, the upward movement is faced with a cluster of resistance in the 1.1540 to 1.1560 region, previously identified as a strong supply zone where sellers have entered markets in the past.
– The Relative Strength Index (RSI) on the daily chart is approaching overbought territory but remains below the 70 threshold, indicating that the pair still has room to climb before encountering strong selling pressure.
– A break above 1.1560 on sustained volume is likely to attract follow-through buying interest, opening discussions for a test of the 1.1600 handle.
Key Resistance and Supply Levels to Watch
Market vulnerability increases as the EUR/USD nears the following supply zones, which have historically attracted institutional sell orders:
– 1.1540: Considered the initial resistance band, often triggering short-term profit-taking by swing traders.
– 1.1550: A fib retracement level from the March-April drop and a volume-congested area on the 4-hour chart.
– 1.1560: A psychological barrier that aligns with long-range moving averages and prior weekly high closes.
A clear upward break through 1.1560, with validation from broader fundamental reasons, could push the pair higher toward longer-term resistance near:
– 1.1620: Identified from multi-month highs.
– 1.1680: A broader target that could come into play if momentum continues and dollar weakness accelerates.
Support Levels Holding Strong
In contrast, significant support levels underpin the ongoing rally, offering clear structure to downside risks. These include:
– 1.1500: A round-number level that has served as a recent consolidation point.
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