EUR/USD Price Forecast: Will Channel Breakdowns Sink Euro Price Levels Under $1.1560?

Quick overview

EUR/USD has been in heavy distribution, holding rangebound near $1.16138, as it has lost its intraday momentum to the upside. Even with the changing macroeconomic dynamics across the Atlantic, the price on a short-term basis has moved beyond its range of recent trading, and the euro is under an assault from algorithmic sellers as it challenges structural levels below.

Today’s Key Market Drivers

Central Banks: Global FX markets have reacted to diverging monetary policy stances from central bankers. 3.8% U.S. consumer price inflation remains sticky, wiping out 2026 rate cut prospects, according to Federal Reserve Chairman Kevin Warsh. At the same time, the European Central Bank is still more focused on the Eurozone’s weak GDP numbers.

Dollar Strength Rebounds: After a few weeks of peace between the U.S. and Iran, the Strait of Hormuz has seen its crude shipping recover to 75-80% of normal operations, although recent military activity in the region has added to the macroeconomic uncertainty. As such, the capital hasn’t yet fully departed from the safe-haven dollar.

Divergent Economic Reports: The split between European and U.S. macroeconomic data has served as a barrier for the euro. German sentiment data have been better than expected, but that has been tempered by a lack of confidence in French businesses. Thus, there was not a euro short squeeze.

EUR/USD Technical Analysis

On the two-hour time frame, EUR/USD is in a very specific downtrend. The EUR/USD has broken below its short-term trading range and made a series of lower highs after being rejected several times between $1.16568-1.16612.

The price moved sharply to the downside and tested its primary support line, which runs along $1.15765-1.15895. Buyers were seen absorbing the first price levels at the $1.1613 line, indicated by the long shadows on the candles. Otherwise, the price has remained inside a clear bearish trend channel.

The 14-period relative strength index, however, sits at 43.29, which is a neutral-to-bearish reading, and is also beginning to form a bullish divergence. Momentum may have bottomed out near term, although there is plenty of room for another leg down, should the dollar maintain its defense.

• Resistance: $1.1615, $1.16338 (the price where EUR/USD needs to recover), and $1.16612 (the high of the previous trend).
• Support: $1.15895 (the trend line), $1.15765, and $1.15633 (channel support)

Trade Strategy

A highly responsive breakout execution strategy is framing up as price trends directly into its key structural floor.

Entry: Sell Stop execution on a confirmed two-hour close below $1.1613

Profit Targets: $1.15765 (the primary support line; Target 1) and $1.15633 (the low end of the bearish channel; Target 2).

Stop Loss: A price of $1.16338.

Closing Thoughts

Today’s short-term price analysis of EUR/USD points to a technical market that is becoming increasingly vulnerable in the current market environment. The pair is about to make a large technical move. While the EUR/USD may recover in the long run as the dollar weakens, the bulls of today are the bears in the immediate term. Watch for upcoming U.S. retail sales figures and central bank speeches, while using the broken trend lines to manage risk in anticipation of an eventual market reversal.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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