Trend or Reversal? What’s Next for EUR/USD
The euro-dollar pair has been dancing to the tune of a downtrend, printing classic lower lows and lower highs. It all started on 1st June 2021, when the pair peaked, marking the high of this bearish phase. From there, the sellers took charge, dragging the price down until it finally hit a demand zone (0.96315–0.98016) on 3rd October 2022—a level where buyers decided they’d had enough.
And so, the bulls launched a counterattack, pushing the price up to 1.12757. But their victory was short-lived. The sellers swooped back in, rejecting that level hard, and since then, price action has remained below it. For over a year, the market consolidated, moving sideways before the bears made another move, plunging the price to 1.04485. Now, after three months of indecision, we find ourselves at a critical point—stuck in a tug-of-war where neither side is willing to give in just yet.
What’s Next for EUR/USD?
If the bulls take control, we could see a push towards 1.07612, just shy of the 61.8% Fibonacci retracement level (1.08200). Should buyers break through this fib level, the next target would be 1.12757—the previous rejection point. If momentum continues beyond that, the market could aim for the supply zone (1.20200–1.22258).
On the flip side, if the sellers regain control—whether at 1.08200, 1.07612, or even the current 1.04485 zone—we could see the dollar flex its muscles again. A move back towards the demand zone (0.96315–0.98016) is on the cards. A break below this zone would confirm the ongoing downtrend, opening the door for another lower low somewhere along the trendline (LL??).
Key Market Events & Fundamentals
Macroeconomic factors are stirring the pot. The US annual inflation rate edged up to 3% in January 2025, slightly above expectations of 2.9%. This signals that inflation isn’t cooling as quickly as hoped, potentially keeping the Federal Reserve cautious about rate cuts.
Looking ahead, 21st February 2025 will be a key trading day, with major economic releases that could shake up EUR/USD:
These data points will give traders insight into economic strength on both sides of the Atlantic, potentially setting the stage for the next move.
At this point, we’re at the mercy of market dynamics—the breakout will decide whether the bulls or bears take the crown. Keep an eye on the charts!