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The EUR/USD currency pair has been trading sideways for several months, but things have been changing in the last few days as we have started to see more signs that the price is beginning to head lower in a more sustained way.
This is driven much more by the US Dollar than the Euro, and this is quite typical for the Forex market, which sees about 75% of its volume from exchanges involving the greenback. The US Dollar is coming to a critical point.
This Wednesday will see the US Federal Reserve hold a policy meeting, which will be keenly watched. Although markets see only a 30% chance of a rate hike, if the Fed does hike it will likely significantly strengthen the US Dollar, and that will be felt in almost all USD currency pairs, including the EUR/USD currency pair.
Even if the Federal Reserve does not hike, its projections and statements, and even comments from its FOMC, have the potential to move the US Dollar. Beyond that, even if there are no surprises, we often see major institutions initiate trades once the meeting is out of the way, just from general caution. So, these meetings tend to be catalysts for price moves.
EUR/USD Technical Analysis
A look at the long-term chart shows that there has been a topping chart pattern, and last week the price closed at its lowest level in months. This is a technical sign of a bearish breakdown. The US Dollar is close to its 13-month high and might make a breakout beyond its key resistance level at 101.39, which would see the price likely to be significantly lower here.
As Europe opened today, we saw the price get very close to the resistance level at $1.1420, but it has dropped quickly from there over the past couple of hours, as at the time of writing.
The problem for bears now is whether the support level at $1.1398, which looks very strong as it has also acted as resistance and is confluent with the round number at $1.1400, can be broken. It might well hold, which would send the price at least somewhat higher over the rest of today.
I see $1.1398 as likely to be today’s pivotal point, but a bearish breakdown could be messy. For short-term traders, I think the best potential set up that might emerge today would be a long scalp managed conservatively from a bullish bounce off $1.1398.
(image27072026eurusd) image here
My Take on EUR/USD
I see $1.1398 as likely to be today’s pivotal point, but a bearish breakdown could be messy. For short-term traders, I think the best potential set up that might emerge today would be a long scalp managed conservatively from a bullish bounce off $1.1398.
I am currently short of this currency pair, but that is a long-term trade. It is probably worth keeping in mind that this currency pair has a track record of respecting its long-term trend better than any other currency pair in the Forex market over recent years, and it is currently in a long-term bearish trend.
Review, Support & Resistance Levels .
Risk 0.75%.
Trades may only be taken prior to 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1420, $1.1435, or $1.1460.
Put the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1398, $1.1387, or $1.1315.
Put the stop loss 1 pip below the local swing low.
Adjust the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
There is nothing of high importance scheduled today concerning either the Euro or the USD.
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