EUR/USD: A Healthy Correction Ahead of the Next Rally
Hello everyone, Camila here!
On the H4 timeframe, the bullish structure remains clearly intact. Price continues to form higher highs and higher lows, while the ascending trendline drawn from key swing lows is still being respected by the market. This indicates that the primary buying pressure has not left the market.
After breaking out of the compression area and printing a new high, EUR/USD has entered a correction to retest the previous breakout zone. This is a very common technical behavior associated with institutional money flows. The market often returns to recently broken levels to confirm the role shift from resistance to support.
The current correction, in my view, represents a healthy pullback rather than a distribution phase. Selling pressure has not expanded, downside momentum remains controlled, and the bullish structure has not been compromised. In particular, the 1.16501.1660 area stands out as a key support zone, as it aligns with prior structural support and the 50% Fibonacci retracement of the latest bullish impulse.
In the scenario I am monitoring, EUR/USD may continue to decline toward the 1.16501.1660 area to test demand. If price holds this zone and fresh buying signals emerge, the market is likely to rebound toward the 1.17401.1760 resistance zone. A strong break above this resistance would open the door for further upside extension in the medium term.
From a news and macroeconomic perspective, EUR/USD is receiving a degree of support. Expectations that the Fed will maintain a dovish stance throughout 2026 continue to put pressure on U.S. Treasury yields, leading to a relatively weaker U.S. dollar. Recent U.S. economic data point to slowing growth, while inflation is gradually easing, increasing the likelihood of monetary policy ea