EUR/USD Stuck in Narrow Range Amid Indecision, Initial Recovery Signals Emerge

EUR/USD traded within a narrow range early Tuesday, continuing the sideways movement seen on Monday, which resulted in a Doji candle, signaling market indecision.

An initial positive signal is forming on the daily chart following last Friday’s strong downside rejection, which created a bear trap below the 1.0405 Fibonacci support (50% retracement of the 0.9535/1.1275 rally from September 2022 to July 2023).

The pair has also initiated a recovery probe above the upper boundary of a falling wedge pattern. A decisive break above this level would strengthen the bullish signal.

However, further upside action is needed to confirm this recovery. Key resistance levels at 1.0525/1.0563 (falling 10-day moving average and the 38.2% Fibonacci retracement of the 1.0936/1.0327 decline) must be cleared to pave the way for a stronger rebound.

Caution remains due to weak technical signals. The 14-day momentum indicator is still deeply in negative territory, despite showing signs of improvement, and daily moving averages are in a bearish configuration.

Additionally, predominantly euro-negative fundamentals could limit recovery attempts, as underlying sentiment remains fragile.

Res: 1.0525; 1.0563; 1.0609; 1.0634
Sup: 1.0475; 1.0424; 1.0705; 1.0332