Peter Smith
The EUR/USD pair is displaying early signs of recovery after touching a critical support level near 1.1520. Traders are now watching for a potential bullish correction following recent dollar-driven declines and broader risk-off sentiment in the markets.
EUR/USD Chart Overview: Support Holds Firm
According to trader MrSean's latest analysis, the 8-hour chart shows EUR/USD currently trading at 1.1542, just above a key demand area. The support zone between 1.1500 and 1.1520, marked in red, has consistently acted as a turning point in recent sessions, creating what appears to be a bullish reaction zone. Price action reveals rejection from this level, with long lower wicks indicating buying pressure emerging after the extended decline.
The chart projects a possible move toward 1.1675, which aligns with prior resistance from mid-October. This suggests traders may be positioning for a technical retracement rather than a complete trend reversal. That said, if the pair breaks decisively below 1.1500, the outlook could flip bearish again, with downside risk extending toward 1.1450.
Macro Drivers: Dollar Strength and Eurozone Uncertainty
Recent euro weakness stems from the resilient U.S. dollar, which has been supported by:
- Strong U.S. economic data maintaining Fed hawkishness
- Expectations that the Federal Reserve will keep rates restrictive for longer
- ECB caution, with rate cuts unlikely before 2026
- Continued slowdown in eurozone growth
This policy divergence has capped euro gains for months. However, the current technical setup suggests short-term oversold conditions that could trigger a relief bounce.
Bulls Look for a Short-Term Rally
EUR/USD is once again testing an area where buyers have historically stepped in. As long as the pair holds above 1.1520, a short-term rally toward 1.1675 looks increasingly probable. With sentiment turning cautiously optimistic, this support zone could favor euro buyers in the near term.
Peter Smith
