FX.co ★ Jackroay | EUR/USD

EUR/USD is currently trading within an ascending channel, which I interpret not as genuine bullish strength but as a phase of market manipulation aimed at gathering additional liquidity in preparation for a downward continuation. The overall technical setup indicates that EUR/USD remains in a bearish context, with the primary objective being the renewal of the swing low in the H4 range around 1.1542, plus or minus a few points. The 23.6% daily Fibonacci retracement level at 1.1520 serves as an important support area, and the pair’s approach toward this level will be decisive in confirming further bearish movement. The broader picture aligns with the behavior of the U.S. dollar index, which has recently rebounded from a liquid area and continues to rise, indicating that EUR/USD could weaken further as the assets are inversely correlated. The current formation of a candlestick reversal pattern supports the view that a sell attempt on a retest is a valid strategy. EUR/USD is trading within a highly liquid zone of the H4 Fair Value Gap, and after testing the FVG of the M15 period, the pair has satisfied the technical criteria for initiating a sell setup. However, while these signals strengthen the bearish case, it must be acknowledged that the market often behaves unpredictably around key liquidity zones, particularly ahead of major news releases such as the one expected at 3:30 PM Moscow time, which could serve as the catalyst for today’s potential downward move. The projected decline of approximately 50 pips could bring EUR/USD closer to the critical Fibonacci level, and finding solid support there would be a key confirmation of continued weakness.

At the same time, EUR/USD exhibits the possibility of a local pullback before resuming its main downward trajectory. The level of 1.1612 stands out as a significant short-term resistance, where a liquidity-driven test may occur before sellers regain control. Should EUR/USD rise toward this level, a bearish reversal signal could initiate a sharp decline aimed at removing liquidity below the recent lows. A move from 1.1612 down to the previous minimum, referred to as point X, could finalize the liquidity sweep before the market attempts a corrective rally to the volume accumulation zone near 1.1661. If EUR/USD reaches this zone, a potential retest of 1.1612 could follow, serving as confirmation of resistance and paving the way for renewed downward momentum. Monitoring the order book will be crucial, as it currently shows that liquidity accumulation below the current price is still insufficient to support a large downside breakout. This means that EUR/USD might first display a deceptive upward move to 1.1612, designed to lure buyers and build the necessary liquidity below. Once this liquidity has sufficiently accumulated, EUR/USD could resume its dominant bearish trend, targeting a complete removal of liquidity under the previous lows before possibly launching a broader corrective rise toward 1.1798. In essence, the market remains in a liquidity-hunting phase, and while short-term corrections are likely, the overarching technical picture for EUR/USD still favors a southward continuation.