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EURUSD is showing a strong bullish retracement after a longer-term downtrend. Price is now above the Ichimoku cloud, with Span A at 1.0851 and Span B at 1.0825, which shows temporary bullish momentum but not a confirmed trend reversal.
The area between the 61.8% (1.1402) and 78.6% (1.1907) Fibonacci retracement levels is a key supply zone. This zone also aligns with previous highs near 1.12, where the market seems to have grabbed liquidity before showing signs of exhaustion.
Both Trend Strength Index (TSI) indicators are in the overbought zone:
TSI(10): 0.92
TSI(20): 0.77
This shows strong momentum, but also that the move may be overextended and due for a correction. The current structure suggests a possible lower high forming, which supports the idea of a short entry if price reacts in this zone.
Short Setup Plan:
Entry zone: 1.1402 – 1.1907 (Fibonacci zone)
Stop Loss: 1.25 (above the 100% retracement)
Targets:
TP1: 0.95 (key psychological level, previous lows)
TP2: 0.88 (extension zone)
Risk Reward Ratio: Over 2
This setup assumes the bullish retracement is temporary and price may continue the larger bearish trend.
EUR/USD is reacting to shifting expectations between the ECB and the Fed. While the Fed is expected to cut rates later in 2025, the ECB may move earlier due to weak growth and cooling inflation in the Eurozone. Recent ECB statements show a cautious tone. At the same time, the U.S. economy remains relatively strong. If the Fed delays cuts or the ECB moves faster, the euro could weaken again, supporting a bearish technical setup.
Disclaimer: This content is for educational and informational purposes only. It does not represent financial advice or a recommendation to buy or sell any financial instrument. Trading involves risk, and you should only trade with money you can afford to lose.