Usman Salis
The euro is losing ground against the U.S. dollar as technical charts signal a potential bearish setup developing near the 1.17 resistance zone. Following a brief rally last week, EUR/USD couldn't maintain its position above the upper range, hinting that the market may be gearing up for another decline amid sustained dollar strength and ongoing Eurozone challenges.
Technical Overview: Euro Struggles at Key 1.1720 Resistance
Market technician Lemayian recently noted that his previous TGIF trade has hit breakeven, and he's now monitoring how the pair behaves within the 4-hour Fair Value Gap (FVG) area to confirm a short bias for the coming sessions.
The chart reveals EUR/USD approaching the 1.1720 zone, where sellers previously took control. A rejection candle has formed at this level, marking a clear supply area between 1.1685 and 1.1722.
This FVG zone has served as a technical magnet for liquidity sweeps before reversals, and the pair's inability to close above this region—combined with lower wicks showing rejection—confirms a bearish setup on the 4-hour timeframe. The potential downside target sits near 1.1540, where earlier liquidity and key support from mid-October swing lows converge. If price rejects again near 1.17, traders may target this level.
Macro Drivers: Dollar Resilience and Euro Fragility
Beyond technicals, macroeconomic forces continue pressuring the euro. The U.S. dollar maintains support from robust Treasury yields and cautious Federal Reserve messaging, reinforcing its strength across major pairs. Meanwhile, the Eurozone faces elevated inflation alongside weakening growth data, leaving the European Central Bank in a tough policy spot. This divergence between a resilient U.S. economy and stagnant Eurozone growth has driven EUR/USD's downtrend since early Q3, and traders are watching closely for signs that the dollar's short-term pullback has ended.
Critical Zone Between 1.17 and 1.1720
For traders, the 1.17–1.1720 region is the area to watch. Another rejection candle within this band would likely confirm continuation toward 1.1580 and possibly 1.1540. However, a decisive daily close above 1.1725 could invalidate the near-term bearish view and open the door toward 1.1780, though this would probably require fresh fundamental catalysts like weaker U.S. data or a dovish shift
Usman Salis
