EURUSD Eyes Breakout as Bullish Momentum Builds Above Key Support

EURUSD remains in focus as bullish momentum continues to build following a strong recovery from its January lows. Technical patterns and moving average crossovers point to sustained upside pressure, while recent price action shows resilience above key support zones. With momentum indicators still favoring the bulls, traders are closely watching for a potential breakout through resistance that could open the door to further gains.

High Impact Economic Events

Friday 09:00 am (GMT+3) – UK: Retail Sales m/m (GBP)

Chart Analysis

Since establishing a bottom at 1.01768 on January 13, EURUSD has undergone a meaningful recovery, initially signaled by a Morning Star candlestick formation and subsequently reinforced by a failure swing reversal pattern. The formation of a higher low at 1.02089, followed by a decisive break above the prior swing high at 1.05321, confirmed a bullish reversal structure.

This upward movement gained further credibility with the appearance of a “Golden Cross,” as the 20-period Exponential Moving Average (EMA) crossed above the 50-period EMA—an indication of strengthening medium-term bullish momentum.

However, the rally stalled near the 1.18290 resistance level, marking a peak gain of over 16% from the January low. Despite a temporary dip below the 20-period EMA, EURUSD has managed to close above it for four consecutive sessions, reflecting persistent buying interest.

Momentum indicators continue to support the bullish outlook. The Momentum Oscillator remains comfortably above the 100 level, while the Relative Strength Index (RSI) holds above its 50-neutral threshold—both pointing to ongoing positive price pressure.

Should the pair sustain upward momentum and break through key resistance zones, the path toward further gains appears increasingly viable.

Key Resistance Levels

If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:

1.18290: The first level of resistance is projected at 1.18290, which aligns with the daily high marked on July 1.

1.18741: The second price target is seen at 1.18741, corresponding to the weekly resistance, R1, calculated using the standard Pivot Points methodology.

1.19981: The third price target is seen at 1.19981, corresponding to the 161.8% Fibonacci Extension drawn from the high point, 1.18290, to the low point, 1.15553.

1.22718: An additional upside target is determined at 1.22718, reflecting the 261.8% Fibonacci Extension drawn from the high point, 1.18290, to the low point, 1.15553.

Key Support Levels

If sellers take control of the market, traders may focus on the following four key support levels:

1.16323: The initial support level is seen at 1.16323, representing the weekly Pivot Point, PP, estimated using the standard methodology.

1.15553: The second support level is positioned at 1.15553, aligning with the swing low from July 17.

1.14454: The third downside target is noted at 1.14454, corresponding to the low point from June 19.

1.12094: An additional downside target is determined at 1.12094, reflecting the daily low recorded on May 29.

Fundamentals

The European Central Bank (ECB) has decided to keep interest rates unchanged, as inflation is currently at the 2% target. Domestic price pressures are easing, and wage growth has slowed, indicating inflation is stabilizing. The ECB also noted that the eurozone economy remains resilient despite a challenging global environment, helped in part by previous rate cuts.

However, uncertainty remains high, especially due to ongoing trade disputes. The ECB emphasized that future decisions will be based on economic data assessed at each meeting, without committing to a specific path for interest rates. The current rates for the deposit facility, main refinancing operations, and marginal lending facility remain at 2.00%, 2.15%, and 2.40% respectively.

Conclusion

In conclusion, EURUSD maintains a constructive technical setup, supported by bullish momentum and resilient price action above key support levels. While the pair faces notable resistance ahead, a sustained break above these zones could pave the way for continued upside. With fundamentals relatively stable and the ECB holding its policy stance, market participants will remain focused on technical cues and evolving sentiment to gauge the next directional move.