EUR/USD Gains Fade Near Key Resistance as Markets Await Fed Signals
Technical Analysis:
EUR/USD advanced to a fresh three-day high in early European trading Wednesday, rising sharply from its intraday low at 1.1181 to peak at 1.12655 on the EBS platform. The initial upward move was supported by softer U.S. 2-year Treasury yields and widespread selling pressure on the U.S. dollar. However, the rally quickly ran into significant resistance at the 1.1265/70 area, previously a key support-turned-resistance zone, prompting sellers to re-emerge and rapidly erase most intraday gains. By the New York open, the pair stabilized near 1.1225, retaining modest session gains of roughly +0.33%, but clearly signaling diminished bullish momentum.
Technical indicators reflect caution for EUR/USD bulls in the near term. Wednesday’s daily candle is shaping into a bearish shooting star formation, characterized by a long upper wick, signaling rejection at the higher levels and highlighting considerable selling interest around the 1.1265/70 resistance zone. Additionally, the declining monthly RSI underscores weakening bullish momentum over the medium-term horizon. Unless EUR/USD can quickly regain and hold above the critical 1.1270 level, downside risks may grow more prominent, potentially exposing support at the daily low (1.1181), followed by firmer structural support around 1.1150, near recent weekly lows.
Fundamental Outlook:
Market participants are carefully awaiting comments from Federal Reserve Vice Chair Philip Jefferson regarding the economic outlook. Should Jefferson signal greater confidence in U.S. economic resilience or hint at higher-for-longer interest rate expectations, renewed dollar strength could trigger additional EUR/USD selling. Conversely, dovish or cautious remarks could re-ignite dollar selling, possibly enabling EUR/USD to re-challenge and break above the current resistance at 1.1265/70. Traders will closely watch Jefferson’s tone, alongside upcoming Eurozone GDP and PMI data, for further cues on ECB terminal rate expectations, which currently sit around 1.75% based on March 2026 Euribor futures, compared to 1.50% just three weeks ago.