FX.co ★ Pi-Network | EUR/USD

EURUSD Weekly Technical and Fundamental Analysis & Trade Setup The EURUSD weekly chart presents a bearish structural picture, currently consolidating at a critical juncture. The pair closed the latest week at 1.1707, having formed a bearish engulfing candle within a clear long-term downtrend. The price action is trapped between the key support level of 1.1704 (recent low) and a descending resistance trendline originating from the July 2023 high near 1.2230. The market is in a sustained downtrend as evidenced by a series of lower highs and lower lows, with the most recent major high at 1.1850 in November 2024. The overall trajectory points towards a test of major long-term support zones near 1.1470 and 1.1090, as projected on the chart. Technically, the indicators offer a mixed but leaning bearish signal. The RSI at 58.01 is neutral, having retreated from overbought levels, suggesting the prior minor uptick lacked momentum. More notably, the MACD histogram, while still positive at 0.00693, has turned down and is converging towards its signal line (0.00841), indicating weakening bullish momentum and a potential bearish crossover in the making. The moving average, implied to be around MA10 (not explicitly plotted but a key short-term trend filter on W1), will likely act as dynamic resistance above the current price. The failure to sustain above 1.1805 this week reinforces the prevailing selling pressure. Fundamentally, the divergent monetary policy paths between the European Central Bank (ECB) and the Federal Reserve (Fed) continue to be the core driver. The Fed has signaled a slower pace of rate cuts than initially anticipated by the market, maintaining a "higher-for-longer" stance on U.S. interest rates due to persistent inflationary pressures and a resilient economy. Conversely, the ECB, facing a stagnating Eurozone economy with weaker growth projections, may be compelled to initiate or continue a more aggressive cutting cycle. This policy divergence underpins the U.S. Dollar's yield advantage, applying sustained downward pressure on the Euro.

Trade Setup & Summary: · Bias: Bearish below 1.1805, with a primary objective of testing the 1.1470 support. · Key Resistance: The descending trendline (approx. 1.1780-1.1805) and the MA10. · Key Support: 1.1704 (immediate), followed by 1.1470 and 1.1090 (projected). · Trade Idea: A conservative bearish entry could be considered on a confirmed break and close below 1.1704, targeting 1.1470, with a stop loss placed above the recent high at 1.1805. A more aggressive approach would be to sell rallies towards the 1.1780-1.1805 resistance zone, anticipating a rejection and resumption of the downtrend. · Risk: A sustained break and weekly close above the descending trendline and 1.1850 would invalidate the immediate bearish structure, potentially signaling a deeper correction towards 1.1950-1.2000.