The EURUSD pair is now moving within an ascending channel that dates back to mid-2025. Since then, the market has witnessed three completed momentum swings in both directions.
At present, quotes seem to be gathering near the channel’s lower boundary. The technical setup signals a high probability of breaching support. Several fundamental factors confirm this scenario, as the euro faces mounting headwinds. Here’s why:
1. Geopolitical struggles and energy shocks
Escalating tensions in the Middle East have recently triggered a sharp rally in commodity prices. These developments weigh most heavily on Europe, one of the world’s largest net energy importers. The United States, by contrast, is more resilient due to its greater domestic resource base.
2. Monetary policy divergence
The US Federal Reserve (Fed) remains rather hawkish. The country’s robust labor market and stubborn inflation leave the central bank with little room to maneuver. These conditions force officials to keep interest rates unchanged. Market expectations have already been revised accordingly, with only one or two cuts anticipated this year, down from the three projected earlier.
Meanwhile, the European Central Bank (ECB) completed its eight-step easing cycle last June. As a result, borrowing costs fell to 2.00% and have remained there since. This creates a policy gap of 150–175 basis points between the Fed and the ECB, which puts extra pressure on the single currency.
In summary, both the pair’s technical picture and the fundamental backdrop signal an imminent decline. The channel’s support is likely to be breached in the near term, sending prices lower.
The ultimate recommendation is to sell EURUSD when it breaks through the sloping line from top to bottom, with a target of 1.11000 within 2–3 months. Place Stop Loss in the middle of the channel near 1.19000 to mitigate risk if the market plays against us.
This content is for informational purposes only and is not intended to be investing advice.
