EUR/USD is showing a potential bearish setup after rejecting the strong resistance zone around 1.13800 and forming a Change of Character (ChoCh) at the 1.13100 level. The pair has bounced from the strong support zone at 1.12700, but structure suggests that a break below this level could confirm a bearish continuation.
🔎 Technical Breakdown:
- Price has respected the lower high structure and retraced to the 0.786 fib level near 1.12975.
- A clear breakdown below 1.12700 support would likely trigger a wave down toward the 1.12100 expected target, which aligns with the 1.618 fib extension.
- If price breaks and holds above 1.13800 resistance, this bearish setup becomes invalid.
📰 Fundamental Drivers Supporting Bearish Bias:
- 🇺🇸 US Dollar Strengthening: Recent U.S. economic data including better-than-expected ISM Services PMI and non-farm payrolls continue to support a strong dollar, limiting EUR upside.
- Federal Reserve Hawkish Stance: Fed officials remain cautious about rate cuts. A prolonged pause or delay in easing continues to attract capital back into USD.
- 🇪🇺 Eurozone Weakness: The ECB has signaled a possible rate cut by June, supported by falling inflation and slowing growth in Germany and France. This diverging policy path weakens the Euro.
Yield Spread Pressure: The widening bond yield spread between U.S. and European bonds favors USD accumulation.
// As long as EUR/USD trades below 1.13800, the bias remains bearish. A confirmed breakdown below 1.12700 could open the door to 1.12100 and deeper targets like 1.11600. //
Trade closed: target reached
EURUSD dropped — secured over 100 pips profit.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.