EURUSD – pullback from new 2025 high signals positioning for potential acceleration above 1.20

The euro inched higher on Friday as the second leg of the pullback from the new 2025 peak at 1.1918 found a footing at key Fibonacci support at 1.1655, marking the 50% retracement of the 1.1391–1.1918 rally.

Near-term bearish momentum paused after the sharp two-day decline, with calmer trading expected ahead of the release of key U.S. inflation data (PCE) later today.

The daily chart remains bearishly aligned, with negative momentum and the 10/20/55DMA’s in bearish formation, though oversold stochastic readings partly offset the downside pressure.

Strong support rests at 1.1625/10 (thin daily cloud) and the 1.1590 zone, reinforced by a double Fibonacci confluence (61.8% of 1.1391/1.1918 and 38.2% of the larger 1.1065/1.1918 rally) along with the 100DMA, also marking the former higher base from late August and early September. This area is likely to generate strong headwinds for bears.

The pair remains in a corrective phase within a broader uptrend, which is still intact, with current dips viewed as positioning for another push higher.

This outlook is supported by expectations of a weaker dollar amid rising bets on further Fed policy easing. Markets anticipate two more rate cuts by the end of 2025, totaling a 1% reduction in borrowing costs by year-end 2026, while talk of a potential 500 billion euro stimulus package for the German economy adds an additional layer of support for the single currency.

Res: 1.1717; 1.1738; 1.1765; 1.1820
Sup: 1.1650; 1.1625; 1.1590; 1.1516