just now
- EUR/USD confirms breakout structure, reclaiming key resistance as price aims for 1.1830 with bullish momentum intact.
- Dollar weakness accelerates euro strength, as DXY breaks below 98.00 and markets fully price in a Fed pause through Q3.
- Key decision point at H4 Fair Value Gap, with bullish scenario targeting 1.1900 and bearish case watching 1.1700 breakdown on USD strength.
Euro Poised for New Highs
Previous Forecast:
EUR/USD has successfully followed through on the bullish accumulation structure discussed earlier this week. Coming from a continuous trend to the downside, EUR/USD cooled down after a spike last Wednesday, July 16. The accumulation showed signs of bullish traction as it trades above the 50% of the range or the equilibrium level.
On Monday, as forecasted:
- Price broke above resistance near 1.1700–1.1720
- Sustained higher closes now validate a shift in structure
- Price is now aiming toward the 1.1830 target
Dollar Weakness Bolstered Euro Strength
The rally is driven largely by dollar weakness, as the U.S. Dollar Index (DXY) broke structure to the downside after rejecting 98.90 last week. Markets are increasingly pricing out any Fed rate hikes, and recent soft CPI and housing data have further tilted expectations toward a dovish Q3.
Checkout the previous forecast here: Dollar Forecast: US Dollar Fails to Hold 99.00 – Sinks Below 98.00 - What’s Next?
Meanwhile, the Euro has been supported by:
- Easing concerns over ECB cuts as euro strength cools from earlier highs
- Trade deal optimism between the EU and the U.S.
- Technical breakout from accumulation range after retesting broken resistance
Fundamental Highlights Behind the Move
- USD Weakness Deepens: The DXY broke below the 98.00 zone, triggering bearish flows and propping up the euro.
- Fed Pause Priced In: Traders are now betting that the Fed will stay on hold through Q3 2025.
- ECB Stays Flexible: The euro’s cooldown from multi-month highs gives the ECB room to hold steady. Policymakers noted inflation is easing “in line with projections,” reducing urgency for rate cuts.
Technical Outlook
As EUR/USD breaks above its multi-day highs and forms a Fair Value Gap (FVG) on the H4 chart, we’re now entering a potential decision point: Will the pair continue toward 1.1830 or reject from premium pricing?
Bullish Scenario: FVG Reclaim and Continuation to 1.1830
In this scenario, EUR/USD respects the newly formed H4 Fair Value Gap and shows a reaction from the 1.17395–1.17457 zone. Price could pull back into the FVG, rebalance, and continue its upside momentum toward the psychological target at 1.1830. Euro would continue to push up as long as:
- DXY Continues Lower: If the U.S. Dollar Index weakens further (e.g. drops below 97.80), EUR/USD is likely to gain strength and push higher.
- Fed Pause Narrative: Any dovish commentary or weak U.S. economic data (like soft PCE or GDP) can drive more downside in the dollar.
- ECB Neutral to Hawkish Tone: If the ECB avoids dovish guidance and inflation stabilizes, the euro could remain supported.
- 1.1800 Break: Euro could move further to the upside if the 1.1800 zone gets invalidated.
Targets:
- Immediate: 1.1830 (short-term resistance)
- Extended: 1.1900–1.1950 if dollar weakness persists
Bearish Scenario: FVG Breakdown and Shift in Structure
In the bearish case, EUR/USD may fail to hold the FVG as support. Instead of a bounce, price could consolidate, then break down, signaling distribution at premium prices. This would confirm a short-term reversal and set the stage for a move back toward the 1.1650 zone. Weakness would increase if:
- USD Rebounds on Strong Data: A strong PCE inflation print or surprise in GDP/NFP could cause a sharp dollar recovery.
- Hawkish Fed Shift: Fed speakers hinting at renewed tightening or pushback against market pricing could reinforce USD strength.
- Risk-Off Sentiment Returns: If equity markets turn lower or geopolitical tensions rise, dollar may regain safe-haven flows.
- 1.1700 Last Line of Defense: Renewed weakness maybe underway if Euro proceeds to lose steam and break the previous support level.
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