it stabilized at 1.1803 on Tuesday after a sharp two-day decline. Support came from strong US macroeconomic data and the Federal Reserve's revised monetary policy expectations.
Statistics showed an unexpected expansion in US industrial activity, suggesting the economy and corporate profits remain resilient. Investor attention is focusing on Friday's report on the U.S. labor market, but its release may be delayed due to a partial government shutdown.
The dollar began rising on Friday after US President Donald Trump nominated Kevin Warsh to head the Federal Reserve, replacing Jerome Powell. The market perceives Warsh as a relatively more aggressive candidate. It allows rate cuts, but at a less aggressive pace than other rivals.
On the other hand, Trump announced a trade agreement with India that involves reciprocal tariff cuts in exchange for New Delhi stopping purchases of Russian oil.
Technical analysis
On the H4 chart, EUR/USD has entered a post-rise corrective phase after failing at the 1.2050-1.2100 area. The price retreated to 1.1850-1.1870. It also remains above the previously broken 1.1830-1.1850 resistance, which remains key support. Momentum weakens: Bollinger bands stopped widening, MACD remains in positive territory, but histogram contracts. The correction is technical in nature; There are still no signs of a change in trend.
On H1, the correction forms a descending channel. The price remains below the middle line of the Bollinger Bands and the recovery remains slow. The stochastic oscillator broke out of the oversold zone, allowing for a short-term rebound. However, as long as prices remain below the 1.1920-1.1950 zone, downward pressure will persist. Maintaining the 1.1830 area is essential to maintain the bullish scenario in higher terms.
Conclusion
In summary, the EUR/USD pair is going through a technical pause after a significant decline, finding temporary support near 1.1803. The stabilization is largely due to a recalibration of Fed expectations following an aggressive leadership nomination and strong US industrial data. While technical indicators suggest that the current move is a correction within a broader uptrend, the immediate outlook remains cautious. The pair's near-term direction largely depends on holding the critical support of 1.1830. It will likely be dictated by upcoming US labor market data, despite possible delays, which will serve as the next big catalyst for the dollar and the pair.
By RoboForex Analysis Department
Disclaimer:
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
