The euro edged higher against the U.S. dollar on Tuesday, with EUR/USD trading around 1.1240 during Asian hours, putting pressure on the upper boundary of a descending channel near 1.1250. The move follows a 0.5% gain in the prior session, signaling growing bullish momentum despite broader bearish technical structures.
The price action suggests a pivotal moment, as bulls attempt to reverse a multi-week downtrend while short-term indicators show renewed strength. The nine-day Exponential Moving Average (EMA) has been breached, while the 14-day Relative Strength Index (RSI) remains just above 50, hinting at continued upside.
Still, the longer-term downtrend remains intact unless EUR/USD can close above the channel’s top resistance.
Key Technical Levels to Monitor
Despite current optimism, technical signals suggest a cautious stance. The descending channel, formed since mid-April, still dictates the pair’s broader bias. Unless EUR/USD decisively breaks above 1.1250, downside risks persist.
Support levels to watch include:
- 1.1210: Nine-day EMA, key near-term support
- 1.1093: 50-day EMA, stronger medium-term support
- 1.0951: Six-week low, critical if bearish momentum returns
- 1.0840: Lower channel boundary
- 1.0778: Two-month low, last seen April 1
On the upside:
- 1.1250: Upper channel resistance
- 1.1573: April 21 high — the strongest level since November 2021
A close above 1.1250 would likely validate a trend shift, encouraging further bullish positioning and possibly triggering a push toward multi-month highs.
Market Outlook and Momentum Cues
The broader outlook for EUR/USD hinges on both technical confirmations and macro catalysts. While sentiment has improved slightly, the euro remains vulnerable to external shocks, including:
- European Central Bank policy signals
- U.S. inflation and rate expectations
- Geopolitical developments in the Eurozone
Traders should monitor volume and momentum indicators closely. A breakout without rising volume may signal a false move, while a high-volume close above resistance could confirm trend reversal.
Summary Takeaways:
- Momentum favors a test of 1.1250
- Channel breakout would shift sentiment to bullish
- Failure to clear resistance could prompt a return to 1.1090 or lower
