EUR/USD Analysis: Resistance at 1.1745 Amid Geopolitical Tension

Technical Outlook and Key Levels

The EUR/USD pair recently exhibited resilience, reversing near the 1.1666 corrective level to return to the 50.0% Fibonacci resistance at 1.1745. A bearish rebound from this level would favor the US dollar and likely trigger a renewed decline toward the 1.1666 support zone. Conversely, a sustained consolidation above 1.1745 would increase the probability of continued growth toward the 61.8% corrective level at 1.1824.

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On the hourly timeframe, the wave structure indicates a shift back to a bullish trend as the most recent upward wave surpassed the previous peak while the subsequent low remained intact. However, this trend lacks stability, as price waves are currently appearing roughly equal in size. While a temporary geopolitical truce initially supported buyers, renewed escalations may limit further bullish attempts.

Fundamental Drivers and Economic Data

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Tuesday's economic releases in the United States had a minimal impact on market sentiment due to figures aligning closely with forecasts. The ISM Services PMI was reported at 53.6, nearly identical to the expected 53.7, while JOLTS job openings totaled 6.866 million against a 6.84 million forecast. This lack of data-driven volatility has left traders focusing on external risks rather than macroeconomic reports.

Geopolitics remains the dominant market theme as tensions in the Middle East continue to influence investor behavior. Reports of missile launches and the uncertainty surrounding negotiations between Tehran and Washington have kept market participants cautious. Analysts suggest that renewed conflict in the region could impact energy prices and accelerate global inflation, potentially altering the current currency dynamics.

Long-Term Trends and Sentiment

The 4-hour chart shows the pair reversing in favor of the US dollar after a rebound from the 1.1778 level, suggesting a potential decline toward the 76.4% corrective level at 1.1617. Despite this, the hourly chart currently offers more granular information due to the recent weakness in price movements. No significant divergences are currently observed on technical indicators.

The latest Commitments of Traders (COT) report indicates that professional speculators closed 316 long positions and opened 5,296 short positions during the last reporting week. Despite this shift, the overall advantage remains with the euro, with total long positions at 217,000 compared to 181,000 short positions. This suggests that major market players maintain a long-term interest in the European currency.

Forecast and Trading Advice

Looking ahead, the market is expected to remain sensitive to developments in the Middle East rather than standard monetary policy or economic data. For the current session, the primary focus is the US ADP Employment Change report, though its impact is expected to be limited given the prevailing geopolitical focus.

Trading strategies currently hinge on the 1.1745 resistance level. Short positions may be considered if the pair rebounds from 1.1745, targeting a move back to 1.1666. Alternatively, long positions are viable if the price successfully consolidates above 1.1745, with a target set at the 1.1824 level.

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