Introduction
The EUR/USD currency pair has been closely watched by forex traders as it approaches a critical juncture. After falling to the near-term rising support line from the end of June, the pair managed to hold its ground, maintaining an upside bias in the market. With the focus now shifting towards the 38.2% Fibonacci extension level at 1.1231, traders are keenly awaiting the next move. This article examines the potential scenarios for the EUR/USD pair and analyzes the key support and resistance levels on the 4-hour chart.
Bullish Momentum Remains as Support Holds
As the EUR/USD currency pair tested the near-term rising support line from June’s end, it demonstrated resilience last week, refusing to break lower. This development has provided a glimmer of hope for bullish traders, suggesting that the pair may be poised for a potential bounce in the near term. Holding this support line indicates underlying strength in the market sentiment, leading traders to anticipate a possible move higher.
Focus on 38.2% Fibonacci Extension Level
The critical level to watch in the coming sessions is the 38.2% Fibonacci extension level at 1.1231. A successful bounce off the support line may propel the EUR/USD pair towards this level, which will likely act as a resistance barrier. A break above this point would be considered a significant bullish signal, as it opens up the path towards testing the highs from February 2022. Traders should closely monitor the price action around 1.1231 to gauge the market sentiment accurately.
Resistance Zone: 1.1453 – 1.1495
In the event that the EUR/USD pair clears the 38.2% Fibonacci extension level at 1.1231, it will enter a crucial resistance zone between 1.1453 and 1.1495. This zone corresponds to the highs from February 2022 and is expected to provide a considerable challenge to further upside movement. Traders anticipating a sustained bullish trend should pay close attention to how the price behaves in this resistance zone, as it will likely dictate the pair’s near-term trajectory.
Potential Bearish Scenario
Should the EUR/USD pair fail to find significant momentum to break above the 38.2% Fibonacci extension level, it might experience a pullback. In such a scenario, the next key support level to watch is at 1.0834, representing the July 6th low. A breach of this support could signify a shift in market sentiment towards bearishness, potentially leading to further downside pressure.
Extended Bearish Move Targets April Low
If the bearish momentum continues to strengthen, the EUR/USD pair may head towards the April low at 1.0635. This level could serve as a major support zone, attracting bargain hunters and triggering potential reversal opportunities. Traders with a bearish outlook on the pair should keep a close eye on the price action around the 1.0635 level, as a decisive break below this point could signal a more prolonged downtrend.
Conclusion
The EUR/USD currency pair is currently at a crucial juncture, with traders closely monitoring its interaction with the near-term rising support line from June’s end. A bounce off this support has maintained the upside bias, setting the focus on the 38.2% Fibonacci extension level at 1.1231. Clearing above this level may open up the path towards resistance at highs from February 2022. Conversely, failure to gain momentum could lead to a potential bearish scenario, with support at 1.0834 and the April low at 1.0635 acting as key levels to watch.
