EUR/USD Talking Points:
- After showing strength in early 2026 trade EUR/USD bears took over in May and early-June.
- The sell-off has since slowed although buyers have yet to make much ground above 1.1469, begging the question as to whether a short squeeze and pullback could bring on bigger picture trend continuation potential.
After a strong rally a year ago as markets were getting ready for FOMC rate cuts, EUR/USD has so far spent much of this year grinding, although there has been some short-term trend to work with. In early 2026 trade buyers were making a move, eventually setting a fresh four-year-high in the pair.
But as the Iran conflict took over so too did the fear of European energy vulnerability, and the Euro was hit hard in March to test below the 1.1500 level. A bounce in April was faded in May and June – but so far in July, that move has been stalled and price has been sitting around the 1.1400 handle, begging the question as to which trend will take over next.
EUR/USD Monthly Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD Next Steps
A sell-off stalling can be read as either an impending reversal or a pause in trend. At this point, at least from a relative since with gold and Bitcoin rallying as GBP/USD showing greater strength, I think the bias indicates more of a pause than an impending reversal.
But – with that said, it’s the reaction to a rally and pullback that will illustrate which option is favorable moving forward. I covered this in yesterday’s webinar, as we can still make the claim of lower-lows in the pair from both weekly and monthly charts. But from the daily below we can see where that’s been somewhat messy, although there’s an important message contained in these candles. Sellers have so far responded to pullbacks, holding resistance around 1.1450. But, they’ve also swung less and less weight, illustrated by the higher-lows that have built over the past few weeks.
This indicates an oversold market and one that’s difficult to push for trend-side continuation at this point. It also highlights the possibility of a short-term bullish breakout, which could open the door for bigger picture trend continuation if sellers make a move on follow-through resistance. The 1.1500 area is an ideal spot to look for that to play above current highs, and then there’s a zone of prior support spanning from 1.1576 up to 1.1613 above that that’s of interest.
EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD: How to Position For Reversal
From the above two charts we can see the bearish case fairly well illustrated by the lower-lows and highs that have shown in the pair. While many retail traders will try to trade reversals at the early stage, the fact of the matter is that until bulls show greater demand the forces of trend should be considered as bearish.
For trend traders, this means that they often will not get every pip of every move, and that’s somewhat of the point, as they’re instead trying to focus on probabilities and in this case, the more cogent way of going about the matter would be waiting for price to break above the lower-highs that have so far held, around the 1.1450 area, and then waiting for bulls to stretch up to deeper resistance, whether at 1.1500 or the zone above.
And then the corresponding reaction to that, can then be sought as a higher-low for those looking for the reversal theme. That way, if strength does not pan out, they can, at the least, abandon the trade upon a break to fresh lows.
At this point, we’re just not there yet from the daily chart so until that is the case, I’m looking at rallies in EUR/USD as short-term counter-trend setups.
EUR/USD Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
