ECB-driven recovery in EUR/USD meets stiff opposition from key technical hurdles

The euro remains well supported on Friday, building on the previous session’s rally triggered by the European Central Bank’s first interest rate hike in three years.

Additional support comes from reports suggesting progress toward a potential peace agreement in the Middle East. However, market participants are likely to await more concrete developments before fully pricing in a reduction of geopolitical risks.

EUR/USD is once again testing the resistance zone around 1.1580, where the 10-day moving average converges with the 23.6% Fibonacci retracement of the 1.1849–1.1500 decline. A decisive break above this area would confirm the formation of a higher base around 1.1500, established after two consecutive downside rejections, and generate an initial signal that a near-term recovery may be underway.

Despite the recent rebound, the broader technical picture remains cautious. Daily moving averages and momentum indicators continue to point lower, while the pair remains capped below the base of the daily Ichimoku cloud and the 38.2% Fibonacci retracement at 1.1630. As long as these barriers remain intact, downside risks are likely to persist.

In this environment, corrective rallies may continue to offer more attractive levels for sellers looking to re-establish positions in the broader downtrend that began from the mid-April peak at 1.1850.

Res: 1.1602; 1.1630; 1.1645; 1.1674
Sup: 1.1557; 1.1500; 1.1443; 1.1410