The EUR/USD pair has experienced a pullback to retest the 1.07 zone. At this level, the 38.2% Fibonacci retracement level coincides with the red 21-period Exponential Moving Average (EMA). Sellers may seize this opportunity to enter the market with a predetermined risk above the resistance level, aiming for a decline towards new lows. Conversely, buyers will monitor a potential breakout above the 1.08 level as a signal to increase their bullish bets.
Moving to the 4-hour chart, we can observe a potential bearish chart pattern in formation. However, confirmation of this pattern requires a break below the lower trendline. Such a break would reinforce the resistance zone, which is further bolstered by the presence of the upper trendline. Sellers will be looking for a break below the lower trendline as their target, while buyers will seek a breakout to the upside to negate the bearish setup and position themselves for a rally towards the 1.08 level.
When we zoom in to the 1-hour chart, we can identify another notable price zone around 1.0690. This level has acted as both resistance during the upward movement and support during the downward correction. Additionally, the red 21 EMA is providing dynamic support at this level. Buyers may consider entering the market with a defined risk below this level, anticipating a breakout and a subsequent rally towards the 1.08 handle. On the other hand, sellers will be looking for a break below this level to reinforce their bearish bets and target the lower trendline around 1.0640.
Later today, market participants will be paying attention to the latest US Jobless Claims figures, followed by the US PCE report on Friday, which will conclude the week’s economic data releases.
