EURUSD encounters strong resistance once again at key Fibonacci support

EURUSD is pressing against the key support level at 1.1040 (38.2% Fibonacci retracement of the 1.0781/1.1200 bullish move), after multiple recent attempts to break below this level.

Tuesday’s trading remains confined to a narrow range following a sharp two-day decline. Short-term bears are showing hesitation as mixed technical signals emerge on both the 4-hour and daily charts.

Weaker-than-expected German inflation data for August could increase downside pressure, alongside widespread expectations of a 0.25% rate cut by the ECB on Thursday. However, traders will also be closely monitoring the upcoming US August inflation report and potential clues about the size of the Fed’s rate cut later this month, both of which could influence the dollar.

A break below the 1.1040 pivot could open the door for a test of the 1.1000 zone (a psychological level and the 50% retracement of the 1.0781/1.1200 move) and possibly extend towards 1.0971 (the lower 20-day Bollinger Band), which may provide support.

Strong negative momentum on the daily chart supports this bearish scenario, though the recent 100/200DMA Golden Cross and a rising daily Ichimoku cloud may offer some underlying strength.

Alternatively, if the pair faces repeated rejection at the 1.1040 zone and forms a base, a lift and close above Friday’s peak at 1.1065 would be needed to confirm a reversal and shift the focus back to the upside.

Res: 1.1065; 1.1091; 1.1107; 1.1155
Sup: 1.1026; 1.1000; 1.0971; 1.0935