EURUSD Forming Bullish Continuation SetupEURUSD is currently retesting a key breakout zone that previously acted as resistance and is now serving as strong support around the 1.1620–1.1630 area. After a healthy bullish impulse in recent weeks, the pair is pulling back in a controlled manner, likely forming a bullish continuation setup. I entered from earlier levels and remain confident in a further upward move, with the structure showing signs of a new bullish wave forming.
From a fundamental perspective, the euro is gaining strength as the European Central Bank (ECB) continues to signal a more cautious stance on rate cuts compared to the Federal Reserve. US inflation data released last week came in softer than expected, increasing speculation that the Fed could start its rate-cutting cycle as early as September. This shift in monetary policy outlook has weighed on the US dollar, opening up room for EURUSD to push higher.
Additionally, eurozone macro data is showing early signs of recovery, especially in Germany, where industrial production and sentiment indicators are slowly improving. As inflation in Europe trends lower but remains sticky, the ECB has fewer reasons to rush into easing, which adds strength to the euro over the medium term. This divergence is a critical driver of the current bullish sentiment in EURUSD.
Technically, the market is respecting a clean demand zone, with momentum indicators starting to flatten after the recent correction. With the trend structure intact and fundamentals aligned, I'm targeting the 1.2180–1.2200 zone as the next leg of this bullish cycle. Price action remains favorable, and the broader sentiment on TradingView is also increasingly bullish, confirming my conviction in this setup.
