EURUSD stays trapped in a vise, squeezed by relentless technical pressure and a macroeconomic landscape that offers little room for relief.
All charts are now speaking loud and clear. After breaching a key ascending support line, the pair executed a textbook retest—only to see that the former floor turned into resistance.
If the technicals have set the stage, the fundamentals will steal the show. Two distinct forces are currently working in tandem to keep the single currency on the back foot:
1) The eurozone is firing off red flags on multiple fronts. Inflation and unemployment figures came in below expectations, while business activity is flashing amber in both manufacturing and services. To make matters worse, the energy factor is adding kerosene to the fire: climbing oil prices, stoked by simmering tensions in the Middle East, are reigniting inflation fears and throwing fresh sand in the gears of an already sluggish regional economy.
Across the pond, the narrative couldn't be more different. US data continues to project an aura of relative stability. The labor market remains on solid ground, even if housing and industrial production send mixed signals. As a result, market participants have doubled down on the belief that US interest rates will stay higher for longer—a dollar-positive theme that has only gained traction.
2) The geopolitical x-factor is also in play. The Middle East is now teetering on edge, with the risk of a ground operation in Iran looming as a game-changer. If tensions boil over, oil prices would rocket, global uncertainty would spike, and investors would likely rush for the exits—heading straight into the arms of the ultimate safe haven: the greenback.
On the one hand, the bloc is grappling with economic fragility. On the other, the Federal Reserve holds steady on its hawkish course. As a result, the balance of power remains tilted firmly against the euro. The stars are aligned for further EURUSD weakness—a trend fueled by the widening chasm between a stumbling eurozone and a still-resilient American GDP.
The final recommendation:
— Sell the EURUSD pair at the current price, targeting 1.11500 within one to two months.
— To manage the risk, place a Stop Loss order 1% above the entry price in case the market moves against us.
This content is for informational purposes only and is not intended to be investing advice.
