Time Zone: GMT +3
Time Frame: 4 Hours (H4)
Fundamental Analysis:
The EUR/USD pair is set for increased volatility today as both eurozone and U.S. economic data and events unfold. In the morning, the euro saw relatively stable releases, with Italy’s trade balance slightly beating expectations and the overall eurozone trade surplus remaining strong. Germany’s 30-year bond auction and the Bundesbank’s Monthly Report added to the euro-side focus. On the U.S. side, a heavy data schedule begins with slightly higher-than-expected Core PPI and PPI figures, followed by key releases like industrial production, capacity utilization, and crude oil inventories. Later in the day, the Beige Book and several speeches from FOMC members, including Barkin, Barr, Daly, Cook, Waller, and others, could offer new insights into the Fed’s rate outlook. With additional data on retail sales, unemployment claims, and housing sentiment also on the calendar, market participants should expect active trading in EUR/USD throughout the day.
Price Action:
The EUR/USD on the H4 timeframe is currently exhibiting a sharp bearish move following a period of sideways consolidation near recent highs. Price action has broken decisively below the lower Bollinger Band, signaling a potential shift in momentum after failing to sustain its bullish structure. This move comes after a series of lower highs, indicating growing selling pressure. The recent breakdown has pushed the pair below previous support levels, and the current candle shows strong bearish follow-through. The RSI is hovering near the oversold threshold, reflecting the strength of the downward move but also cautioning against potential short-term exhaustion. Meanwhile, the MACD histogram continues to build negative momentum, supporting the bearish outlook. Given this technical setup, the pair may be entering a bearish continuation phase. However, with price now extended below the Bollinger Band, a temporary pullback or consolidation could occur before any further decline. Traders should monitor for either a confirmation of the breakdown with sustained lower closes or a potential mean reversion back toward the middle band.
Key Technical Indicators:
Bollinger Bands: The price has broken below the lower Bollinger Band, reflecting strong bearish momentum and increased volatility. The bands had recently begun to expand following a period of contraction, suggesting a potential breakout has already started. Continued movement below the lower band may confirm a downside extension, while any pullback toward the middle band could encounter resistance.
RSI (Relative Strength Index): The RSI is hovering just above the 30 level, nearing oversold territory. This indicates strong bearish pressure, but also warns of potential exhaustion if selling continues without a pause. A break below 30 would confirm oversold conditions, while a bounce could suggest a short-term corrective move.
MACD (Moving Average Convergence Divergence): The MACD histogram is in negative territory and continues to decline, showing building bearish momentum. The MACD line remains below the signal line, reinforcing the current downtrend. Unless a crossover occurs or histogram bars begin to contract, the bearish bias remains intact.
Support and Resistance Levels:
Support: The recent breakdown area near 1.1600 now acts as immediate support. This level has previously served as a pivot zone during earlier price consolidation. A confirmed move below this support could expose the next downside target around 1.1500, which aligns with the mid-June consolidation zone and lower Bollinger Band extension.
Resistance: The 1.1675–1.1700 zone serves as the immediate resistance, marking the lower boundary of the recent consolidation range. This area also coincides with the middle Bollinger Band, reinforcing its technical significance. A break above this resistance would suggest easing bearish pressure, with the next upside target around 1.1775, near recent swing highs and prior rejection points.
Conclusion and Consideration:
The EUR/USD pair is at a critical juncture, with both fundamental and technical factors pointing toward heightened volatility in the near term. From a fundamental standpoint, a packed U.S. economic calendar and key Fed communications could significantly sway market sentiment, particularly as inflation and growth data continue to shape rate expectations. On the technical front, the sharp bearish breakdown below key support and the lower Bollinger Band, alongside weakening momentum indicators, suggests the potential for further downside. However, oversold conditions on the RSI and extended price action may prompt a temporary pullback or consolidation. Traders should remain alert to evolving macroeconomic signals and price behavior around the 1.1600 support and 1.1675–1.1700 resistance zones, as these levels may determine the next directional move for the pair.
Disclaimer: The analysis provided for EUR/USD is for informational purposes only and does not constitute investment advice. Traders are encouraged to perform their own analysis and research before making any trading decisions on EURUSD. Market conditions can change quickly, so staying informed with the latest data is essential.
