EUR/USD – Bulls Gain Technical Momentum; Powell’s Speech Holds the Key
EUR/USD demonstrated clear resilience during Wednesday’s session, rebounding from an overnight low of 1.1622 reached on EBS trading. The pair found strong support early in the New York session near 1.1645 and subsequently rallied to an intraday peak of 1.1673, before modestly retracing and settling around 1.1660, marking a gain of approximately 0.13% on the day.
Fundamental catalysts contributed significantly to EUR/USD’s positive intraday reversal. Notably, U.S. Treasury yields and the dollar weakened broadly following comments from former President Trump calling on Fed Governor Lisa Cook to resign. This unexpected political development further tightened U.S.-German yield spreads, marginally reducing the relative attractiveness of U.S. yields and boosting euro sentiment.
From a technical perspective, EUR/USD exhibits bullish signals reinforced by momentum indicators. Daily RSI has begun turning upward from neutral levels, notably diverging positively from price action seen during the recent six-session low. This divergence, a key early bullish indicator, suggests building underlying bullish momentum, indicating that buyers are gradually asserting control. Monthly charts further support bullish positioning, showing consolidation and stabilization of gains since April, indicative of a potentially strong foundation for further upside movement.
Notably, the daily charts currently highlight a well-defined inverse head and shoulders pattern. The left shoulder formed near 1.1550, the head near 1.1400, and the right shoulder around recent lows near 1.1600. Confirmation of this bullish reversal pattern requires a decisive breakout and daily close above the neckline resistance currently around 1.1750. Successful completion of this formation could trigger a significant bullish rally, initially targeting resistance clusters around 1.2250-1.2300, with more ambitious longer-term objectives possibly extending as high as the 1.2550-1.2600 area.
Immediate resistance for EUR/USD lies firmly at Wednesday’s intraday high of 1.1673. Above this, the critical psychological barrier at 1.1700 emerges as the next key technical hurdle, followed closely by the neckline area at 1.1750. A confirmed daily close above 1.1750 would substantially validate bullish continuation scenarios.
On the downside, initial technical support is well-defined around Wednesday’s session opening level at 1.1645. Further immediate downside support aligns with the overnight low at 1.1622. Should EUR/USD breach below this support zone, bearish pressure could intensify towards deeper supports around 1.1550, potentially revisiting the head of the inverse head-and-shoulders pattern at the key 1.1400 area, thereby negating the bullish reversal scenario.
Looking ahead, market attention remains sharply focused on Federal Reserve Chair Jerome Powell’s upcoming speech at Jackson Hole. Should Powell adopt a dovish tone, signaling willingness to implement aggressive rate cuts, EUR/USD could experience substantial bullish momentum, decisively breaking above key resistance at 1.1750. Conversely, a hawkish stance from Powell could rapidly reinvigorate dollar strength, increasing downside risks for EUR/USD.
Given these technical dynamics and event-driven risks, traders should remain vigilant. A breakout above immediate resistance at 1.1673-1.1700 followed by a decisive move through 1.1750 would strongly confirm bullish bias. Conversely, sustained weakness below 1.1620-1.1645 would signal bearish caution.