EUR/USD Outlook: Key Resistance at 1.1220 Tests Euro Advance

Technical Analysis and Key Levels

The EUR/USD pair reversed upward to test the 127.2% Fibonacci retracement level at 1.1220. A rejection from this level would favor the US dollar and prompt a resumption of the broader downward trend toward the 1.1081–1.1086 support range (corresponding to the 161.8% Fibonacci level at 1.1088 on the 4-hour chart). Conversely, a confirmed close above 1.1220 would open the path toward the 100.0% Fibonacci level at 1.1325.

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Despite the recent upside move triggered by a liquidity sweep below the 1.1114 low, the hourly wave structure remains bearish. The previous downward wave set a new lower low, while the current corrective wave has yet to break the preceding high. Additionally, a bearish divergence on the 4-hour Commodity Channel Index (CCI) indicator suggests potential downside pressure.

Fundamental Background and Central Bank Policies

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Fundamental factors continue to support the US currency. Following the September FOMC meeting, market participants expect at least one more monetary policy tightening before year-end, followed by another next year. This hawkish outlook provides baseline support for the dollar against major peers.

The European Central Bank (ECB) has indirectly confirmed its readiness to continue monetary tightening in December, keeping its policy stance broadly aligned with the Federal Reserve. While these expectations prevent severe selling pressure on the euro, persistent buyer weakness leaves the pair's near-term trajectory dependent on breakout signals at key technical levels.

Commitments of Traders (COT) Position Data

The latest Commitments of Traders (COT) report shows non-commercial traders added 3,492 long positions and 443 short positions over the reporting week. Total long positions among speculators stand at 226,000, compared to 361,000 short positions. Institutional sentiment remains net-bearish, reflecting ongoing risk aversion tied to global economic and geopolitical uncertainties.

Economic Calendar and Trading Outlook

Key economic data releases scheduled for the European session include third-quarter GDP preliminary growth figures and unemployment data for both Germany and the broader Eurozone, alongside German CPI data. These statistics are expected to exert moderate influence on intraday sentiment.

For bullish scenarios, traders may consider long positions following a confirmed close above the 1.1220 level on the hourly chart, targeting 1.1325. For bearish setups, a price rebound and rejection from 1.1220 provides entry opportunities targeting the 1.1081–1.1086 support zone.

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