EUR/USD Bulls Threatened as ECB Cut Sparks Technical Reversal Risk
Technical Analysis:
EUR/USD came under notable bearish pressure Thursday, drifting steadily lower after opening the New York session near 1.1355, following an overnight high of 1.1409 traded on EBS. The European Central Bank’s widely anticipated 25bps rate cut, coupled with ECB President Christine Lagarde’s cautious commentary on growth amid global trade tensions, sparked fresh euro selling, dragging the pair down to session lows around 1.1336. Additionally, EUR/JPY’s decline toward 161.25 added further downside momentum to EUR/USD, reflecting increased market caution and risk-aversion.
Technically, the daily RSI has turned sharply lower after recently signaling overbought conditions, creating potential concerns for bullish traders positioned long EUR/USD since February. This RSI reversal indicates weakening short-term bullish momentum, opening the possibility of a deeper correction if selling pressures persist. Immediate technical support at the session low (1.1336) now becomes critical. A sustained breach below this support could target next downside objectives around the psychologically important 1.1300 level, and subsequently deeper technical supports near 1.1240–1.1260, aligning with recent consolidation lows.
On the bullish side, however, rising monthly RSI and the ongoing consolidation pattern since the February rally offer longer-term bullish comfort, suggesting this pullback may prove corrective rather than indicative of a broader reversal. Bulls must swiftly reclaim resistance near 1.1400–1.1410 to stabilize sentiment, though significant upward momentum will likely require further positive fundamental catalysts. With bond volatility easing—potentially bolstering the dollar—and contrasting Fed and ECB policy stances emerging, bulls should remain vigilant, given the growing technical and fundamental headwinds for sustained EUR/USD appreciation.