EUR/USD Technical Analysis: Potential Reversal at 1.1513 Support

The EUR/USD 4-hour chart reveals a evolving wave pattern. While the broader upward trend initiated in January of the previous year remains intact, the current structure has transitioned into a corrective phase.

Technical Outlook and Support Levels

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On the lower time frame, the pair has formed a classic five-wave bearish structure that appears to be approaching completion. The pair recently found support at the 1.1513 level, which aligns with the 76.4% Fibonacci retracement. A failure to break below this level suggests a potential transition into a new upward wave sequence.

Should the pair sustain its position above 1.1513, technical targets shift toward the 1.1700 level and beyond. Conversely, on a higher time frame, the eventual completion of an A-B-C corrective structure could lead to a decline toward the 1.1352 level, representing the 38.2% Fibonacci retracement.

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Geopolitical Impact on Market Sentiment

The EUR/USD pair appreciated by 40 points following reports of reduced geopolitical tensions in the Middle East. Markets reacted to statements from the U.S. administration regarding progress in potential negotiations with Iran. However, historical volatility suggests that market participants remain cautious regarding the tangible outcome of these geopolitical developments.

While optimism regarding a potential deal has weighed on the U.S. dollar, actual progress remains subject to conflicting reports from involved parties. The sustainability of the euro's recovery is likely dependent on both continued geopolitical stability and upcoming policy signals from the European Central Bank.

Trading Strategy and Risk Management

The current market environment presents a potential opportunity for long positions, provided the support level at 1.1513 holds. Traders are advised to prioritize simplicity in wave interpretation and maintain strict risk management protocols.

As with all technical forecasts, market direction remains probabilistic rather than certain. Utilizing protective stop-loss orders is essential to mitigate risks associated with sudden changes in sentiment or unexpected geopolitical updates.

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