EUR/USD Technical Highlights: Fibonacci Retracement highlights upward momentum, watch for a breakout opportunity at 1.1735

Technical Indicators Show Bullish Sentiment, Fibonacci Retracement as Key Reference

Currently, EUR/USD exhibits strong bullish signals on the technical front. The MACD indicator has shifted into positive territory and continues to rise, indicating substantial upward momentum. Meanwhile, the RSI is operating at 59, leaving ample room for further gains. Notably, the 100-hour simple moving average coincides with the 50% retracement level of the Fibonacci retracement at around 1.1735, forming a critical support and resistance convergence point. This level has become a key area for bulls to defend.

Weak US Dollar and Diverging ECB Policies Boost Euro

The US Dollar Index has declined for the second consecutive trading day, moving away from the four-week high touched on December 10. This depreciation trend stems from a shift in Federal Reserve policy expectations—markets are now more optimistic about potential policy adjustments by the Fed. On the other hand, signals from the European Central Bank indicating no further rate cuts provide strong support for the euro. The policy divergence between the two major central banks is a significant driver pushing EUR/USD higher.

Recent Price Action and Outlook

During Tuesday’s Asian trading session, EUR/USD attracted fresh buying around 1.1710. The strong rebound from the previous day started at 1.1660 (near a four-week low), with the current spot price rising to the 1.1735 zone, representing a 0.10% intraday gain. Breaking through the key technical level at 1.1735 will validate the strength of the upward trend and could trigger a more robust rally.

Fibonacci Retracement 61.8% as Next Target

If bulls successfully defend the current position and push prices higher, the 61.8% Fibonacci retracement level (located in the mid-1.1700s) will become the next resistance. Breaking through this level will further strengthen the bullish signal, but failure to do so may lead EUR/USD to consolidate within recent trading ranges.

Risks Traders Should Watch

During the decline from 1.1808 to 1.1660, Fibonacci retracement provided a clear technical reference for the correction. While the current rebound is optimistic, traders should closely monitor whether resistance can be effectively broken. If not, EUR/USD may return to recent trading ranges for a new phase of consolidation.

(This analysis is based on comprehensive technical data.)