EUR/USD Technical Analysis: Bearish Momentum Persists

Market Overview and Technical Outlook

The EUR/USD pair remains under pressure as it struggles to overcome resistance, retreating from the 38.2% Fibonacci level at 1.1438. The pair is currently consolidating below the 23.6% Fibonacci level of 1.1395, suggesting further downward potential toward the 1.1325 support level. A sustained breakout above 1.1395 is required to shift the outlook toward a recovery targeting 1.1438 and 1.1472.

Wave Structure and Geopolitical Impact

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The hourly wave structure maintains a bearish bias, as recent downward waves continue to print lower lows while upward corrective attempts lack sufficient strength. The market remains sensitive to geopolitical risks in the Middle East, though recent escalation regarding the Strait of Hormuz has not yet triggered a sustained shift in trend. A definitive move above 1.1473 is necessary to invalidate the current bearish technical setup.

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ECB Policy and Market Reaction

Despite the European Central Bank’s decision to maintain current policy settings, President Christine Lagarde signaled that upside inflation risks may necessitate further tightening later this year. This hawkish rhetoric failed to generate meaningful support for the euro, indicating that market participants are currently prioritizing other drivers over central bank policy. The lack of positive response suggests a lack of buyer conviction at current levels.

Institutional Positioning and Trends

The 4-hour chart confirms the pair is trading within a sideways range, with the descending trend channel still intact. Data from the Commitments of Traders (COT) report shows that while institutional traders maintain a constructive long-term view, recent speculative positions are nearly balanced. Total holdings currently sit at approximately 230,000 long positions against 245,000 short positions.

Upcoming Data and Trading Strategy

Investors should monitor the release of German, Eurozone, and U.S. Manufacturing and Services PMI data for potential volatility. For trading, long positions may be considered following a rebound at 1.1325 or a breakout above 1.1395. Conversely, short positions remain valid on a failure to hold above 1.1395, with a primary objective at 1.1325.

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