Euro Holds Firm as Bulls Face Key Dollar Resistance

Key Moments

EUR/USD trades around 1.1435-1.1440 in the Asian session, extending gains for a second consecutive day amid modest USD softness.
Softer US consumer inflation data has weighed on Fed rate hike expectations, though elevated oil prices and geopolitical tensions help support the USD.
The pair remains capped below the 23.6% Fibonacci retracement and the 1.1460-1.1470 resistance zone, keeping bullish conviction in check.

EUR/USD Holds Range as Dollar Eases

The EUR/USD pair is drawing fresh buying interest after pulling back from the 1.1460-1.1470 horizontal resistance band, but continues to trade within a range that has been in place for several weeks. During the Asian session on Wednesday, spot prices are hovering in the 1.1435-1.1440 area, marking a second straight day of gains as the US Dollar (USD) softens modestly.

A weaker-than-anticipated reading on US consumer inflation, released on Tuesday, has prompted market participants to trim expectations for additional Federal Reserve rate hikes. This shift is dampening demand for the USD and is providing a supportive backdrop for EUR/USD.

Macro Drivers: Fed Expectations and Geopolitics

Despite the softer inflation data, several factors are curbing the extent of USD downside. Ongoing inflation risks linked to high crude oil prices and Fed Chair Kevin Warsh’s stated commitment to price stability, together with rising tensions between the US and Iran, are helping to underpin the greenback. These forces act as a counterweight to the recent data-driven USD weakness and are likely to restrict further EUR/USD upside for now.

Technical Picture: Recovery Faces Overhead Barriers

From a technical perspective, EUR/USD is struggling to decisively clear and hold above the 23.6% Fibonacci retracement of the April-June decline. This failure to secure acceptance above that retracement level is tempering bullish enthusiasm.

Momentum indicators point to potential for further corrective strength rather than a confirmed bullish trend reversal. The Moving Average Convergence Divergence (MACD) indicator has turned positive, while the Relative Strength Index (RSI) stands near 56, signaling improving, but still moderate, upside momentum.

This backdrop argues for caution before establishing aggressive long positions or fully committing to a sustained extension of the rebound from the 1.1325 region, which marked the year-to-date low in June.

Key Levels: Resistance and Support to Watch

On the topside, the next significant resistance below the 23.6% Fibonacci retracement is located around the 200-period Simple Moving Average (SMA) on the 4-hour chart, near 1.1490. Should EUR/USD push higher, additional barriers are seen at the 38.2% retracement near 1.1523 and the 50.0% retracement around 1.1585.

On the downside, the primary structural support is situated at the Fibonacci anchor close to 1.1323. A clear break beneath this area would likely reinforce the prevailing bearish bias for EUR/USD and signal scope for a more pronounced decline.

USD Performance Against Major Currencies

The table below summarizes the percentage change in the US Dollar against major counterparts today. According to the data, the USD has shown the strongest performance versus the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.16%	-0.05%	-0.08%	-0.10%	-0.17%	-0.03%	-0.00%
EUR	0.16%		0.05%	0.07%	0.05%	-0.06%	0.07%	0.15%
GBP	0.05%	-0.05%		0.02%	-0.01%	-0.11%	0.02%	0.09%
JPY	0.08%	-0.07%	-0.02%		-0.03%	-0.11%	0.03%	0.06%
CAD	0.10%	-0.05%	0.01%	0.03%		-0.07%	0.00%	0.10%
AUD	0.17%	0.06%	0.11%	0.11%	0.07%		0.11%	0.16%
NZD	0.03%	-0.07%	-0.02%	-0.03%	-0.01%	-0.11%		0.07%
CHF	0.00%	-0.15%	-0.09%	-0.06%	-0.10%	-0.16%	-0.07%

The accompanying heat map is read by selecting the base currency from the left-hand column and the quote currency from the top row. The value in each cell reflects the percentage change of the base currency against the quote currency. For instance, choosing the US Dollar as the base from the left column and moving horizontally to the Japanese Yen column shows the percentage change for USD (base)/JPY (quote).