Euro retreats as Dollar regains momentum with potential recovery
ACY Securities - Jasper Osita
- EUR/USD failed to hold above 1.14189 as dollar strength invalidated key bullish structure
- Price is now trading below a 4H Fair Value Gap, with 1.13127–1.12828 as the next support level
- Upcoming U.S. data (ADP, ISM, NFP) will likely decide whether the euro resumes its decline or rebounds
Dollar Gains Capping Majors’ Upside as Euro Pulls Back from Key Resistance
The U.S. dollar’s (DXY) recovery, which began building momentum at the start of the week, has now extended further following Tuesday’s stronger-than-expected JOLTS print. This broader rebound in the dollar is weighing on major currency pairs, especially EUR/USD, which is showing signs of exhaustion after an earlier attempt to break higher.
Euro Stalls as Dollar Reclaims Control
EUR/USD failed to hold above the 1.14189 level, a key structure that had previously shown potential to act as support following a breakout. However, price has since slipped back below this level, and more importantly, has also dropped beneath the 4-hour bullish Fair Value Gap between the 1.13821-1.14094 level. The invalidation of this Fair Value Gap is now shifting it from support into resistance, putting further pressure on the pair.
This level, once a confluence area for continuation, now serves as a barrier to further upside. Until price reclaims this level with momentum and structure, the euro is likely to remain under bearish pressure.
Key EUR/USD levels to watch:
If dollar strength continues to hold, especially following today’s ADP and ISM Services data, EUR/USD could continue to slide toward the previous support level between 1.13127–1.12828. This level acted as support during last week’s upward move and may once again be tested if sellers maintain control.
Macro Drivers Remain in the Dollar’s Favor-for Now
Fundamentally, the euro remains vulnerable as U.S. labor data continues to show resilience. If ADP and ISM Services PMI come in strong, and the NFP number follows suit, EUR/USD may continue to drift lower in the short term. That said, a disappointing U.S. print could halt the dollar’s advance and provide the euro with a chance to bounce back toward the 1.14 level or even reach new highs above 1.145 but only if technical structure confirms. While momentum favors the dollar for now, avoid chasing moves without confirmation. A deeper euro pullback remains likely if the 1.1382–1.1410 level continues to reject price, but any signs of reversal or support holding at 1.1312–1.1282 could offer a bounce opportunity, especially with high-impact data still ahead.
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