Fundamental Outlook
Euro Side – Recovery Supported, but Not Convincing
The euro continues to benefit from easing downside pressure and a sense that European monetary conditions may remain restrictive for longer than previously expected. This has helped EUR regain some traction after the heavy selling seen earlier in the quarter.
However, the recovery still lacks strong conviction. Growth challenges within the Eurozone, sensitivity to energy prices, and geopolitical uncertainty remain unresolved. These factors prevent the euro from transitioning cleanly into a strong bullish trend and keep rallies vulnerable near resistance.
US Side – Dollar Stable, No Longer Dominant
The US dollar remains fundamentally supported, but recent price action suggests a loss of dominance rather than outright weakness. Much of the earlier dollar strength driven by yield advantage has already been priced in.
This environment allows EURUSD to trade higher, but it also means that any renewed risk off sentiment or dollar positive catalyst could quickly slow or reverse the recovery. As a result, upside continuation in EURUSD remains conditional.

Technical Outlook
Trend Structure
From a higher timeframe perspective, EURUSD is still recovering within a broader corrective framework rather than a fully established bullish trend. While recent price action has produced higher lows, the market has not yet decisively broken key structural resistance from the previous downtrend.
The current setup suggests improving conditions, but confirmation is still required before assuming trend escape.
Key Support Zones
The 1.1600 – 1.1620 area is the first important short term support. Holding above this zone keeps the recovery structure intact and signals buyer commitment.
Below that, 1.1500 – 1.1520 remains the major downside support. A return below this zone would invalidate the recent recovery and place EURUSD back into a clearly bearish trajectory.
Key Resistance Zones
On the upside, 1.1700 – 1.1730 is a critical resistance band this week. This area aligns with prior distribution zones and represents the last major barrier before the market can seriously challenge higher recovery targets.
If price breaks and holds above 1.1730, upside extension toward 1.1800 – 1.1850 becomes possible, though likely with increased volatility.
Momentum Conditions
Momentum remains constructive but is beginning to flatten as price approaches resistance. This suggests that while buyers are present, enthusiasm is becoming more selective. This often precedes either a consolidation phase or a slower grind higher rather than a sharp breakout.

Trading Scenarios
Scenario 1: Consolidation Above Support (Base Case)
The most likely outcome for the week is EURUSD rotating between 1.1600 and 1.1730, digesting recent gains.
In this scenario, dips toward support attract buyers, while rallies into resistance face profit taking. Breakouts may lack immediate follow through.

Scenario 2: Bullish Continuation (Moderate Probability)
If EURUSD achieves clear daily acceptance above 1.1730, upside momentum could extend toward 1.1800 – 1.1850.
This scenario requires continued stability in risk sentiment and no resurgence of aggressive dollar demand.

Scenario 3: Bearish Rejection (Lower Probability)
Failure to hold above 1.1600, especially on a daily closing basis, would suggest the recovery is stalling. This could trigger a pullback toward 1.1520 and potentially lower if selling pressure accelerates.
Such a move would reaffirm the broader corrective nature of the recent rally.