EUR/USD price stabilizes below $1.14 amid U.S. dollar strength and EU inflation data
EUR/USD stabilizes below 1.1400 amid U.S. dollar strength and expectations of ECB rate cuts
The EUR/USD pair is stabilizing around 1.1350 after a brief pullback from recent highs near 1.1400. The pair’s failure to hold above this resistance zone has triggered some profit-taking, but the overall bullish structure remains intact on higher timeframes.
Highlights
- EUR/USD stabilizes at 1.1350 after failing to sustain momentum above 1.1400.
- Price action shows a bullish breakout from a descending wedge pattern.
- Short-term momentum indicators show mild bearish pressure, but the broader trend remains bullish.
A key support zone near 1.1340, coinciding with the 20-period EMA and mid-Bollinger Band on the 4-hour chart, is being tested. If this support holds, a move towards the 1.1400 resistance zone could be on the horizon.
U.S. dollar rebounds on trade deal optimism
The euro is facing selling pressure above the 1.1400 level, as the U.S. dollar strengthens on increased hopes of a quick bilateral trade deal between the U.S. and the EU. European officials have requested domestic companies to provide details on U.S. investment proposals, signaling a potential shift in trade dynamics. Additionally, the market is reacting to cooling inflation in France for May, which raises the possibility of the European Central Bank cutting interest rates in June. This combination of developments is weighing on the euro, keeping it from pushing past critical resistance levels.
EUR/USD price dynamics (Source: TradingView)
On the technical front, the EUR/USD price action reflects a consolidation phase after breaking out from a descending wedge pattern. The price surged into the 1.1380–1.1400 resistance band but has struggled to maintain bullish momentum above this zone. Currently, the euro is consolidating just below this resistance, forming a higher low sequence, supported by the 50 EMA around 1.1309. This consolidation could be a technical retest of prior breakout zones, setting up the next move depending on whether the support at 1.1340 holds or not.
Outlook and key levels to watch
Looking ahead, the focus will be on whether EUR/USD can reclaim the 1.1380–1.1400 resistance zone. A successful break above this level could pave the way for further upside toward 1.1430–1.1480. However, failure to defend 1.1340 support would suggest a deeper retracement toward the 1.1280 level, potentially shifting the sentiment from bullish to neutral. Short-term momentum indicators, such as the RSI and MACD, show signs of waning bearish pressure, but a decisive move is still needed to confirm the next direction.
As previously discussed, EUR/USD continues to navigate a bullish structure on higher timeframes, despite short-term corrections. The key levels to watch are 1.1340 on the downside and 1.1400 on the upside. Any sustained breakouts or failures at these levels will set the stage for the next move in the pair
