EUR/USD at 1.1625: Can Sellers Break the Recovery Before ECB Tightening?

Forex

Summary:

The broader backdrop is complicated: the ECB is expected to raise rates to 2.50% on September 10, but the U.S. dollar is regaining support from expectations of Fed tightening and elevated energy-driven inflation. For M15, SELL 1.1625 is a resistance-rejection setup, with the trade requiring failure above 1.1630 to remain valid....

SELL EURUSD

EXP

TRADING

1.16250

Entry Price

1.15950

1.16400

1.16231 +0.00014 +0.01%

0.0

Pips

Flat

1.15950

Exit Price

1.16250

Entry Price

1.16400

Overall

EUR/USD has stabilized around 1.1620–1.1630 after the sharp decline seen earlier in September. The ECB reference rate for 7 September was 1.1622, confirming that the requested 1.1625 entry is extremely close to the current fundamental reference level. More importantly, the latest intraday pivot structure puts 1.1625 at R1, with R2 around 1.1627 and R3 around 1.1628. This creates a very tight resistance cluster immediately above the proposed entry.

The fundamental picture is pulling EUR/USD in opposite directions. The ECB is expected to raise its policy rate by 25 bp to 2.50% on September 10, largely as an insurance response to energy-driven inflation. Deutsche Bank has gone further, now expecting another 25-bp hike in December because the Middle East energy shock may persist. This should normally support EUR.

However, the dollar has a powerful counterargument. U.S. August employment was stronger than previously expected, and markets are pricing a meaningful probability of additional Fed tightening. Meanwhile, oil has surged toward $100 as geopolitical tensions threaten energy supply, increasing U.S. inflation risks and reducing the likelihood of rapid Fed easing.

Therefore, the SELL is not based on an assumption that EUR fundamentals are weak. It is based on EUR/USD being unable to convert the 1.1625–1.1630 area into a clean breakout despite the ECB's hawkish repricing.

Market Sentiment

Current sentiment is mixed with a slight bearish tactical bias. The latest technical feed shows EUR/USD around 1.1623, with the overall signal classified as Buy, but short-term moving averages are divided: MA5 and MA10 remain Sell while MA50, MA100 and MA200 remain Buy. This is characteristic of a market trapped between short-term corrective pressure and a still-positive medium-term structure.

There is also an important warning for sellers: RSI is around 52, so EUR/USD is not overbought. STOCHRSI is oversold, while MACD and ADX remain constructive. Consequently, simply selling 1.1625 without waiting for rejection would carry unnecessary risk.

The better interpretation is that 1.1625 is a trigger zone rather than an automatic short. If price tests 1.1625–1.1628 and fails, sellers can target the 1.1600 area. But an M15 close above 1.1630 would invalidate the immediate rejection thesis and expose 1.1640–1.1650.

Technical Analysis

EUR/USD at 1.1625: Can Sellers Break the Recovery Before ECB Tightening?_1

Using Bollinger Bands (20,0,2), Ichimoku (9,26,52), and Stochastic (5/3/3), the preferred setup is a tactical SELL at 1.1625.

Bollinger Bands are relatively compressed because EUR/USD has entered a narrow consolidation. The proposed entry is located around the upper portion of the immediate range, making a rejection particularly attractive if an M15 candle fails to hold above 1.1625. The bearish confirmation would be a return below the Bollinger middle band followed by a break of 1.1619–1.1620.

Ichimoku remains the main challenge. The medium-term structure is still constructive, supported by the 50-, 100- and 200-period averages. Therefore, the SELL should be treated as an M15 reversal trade rather than a major trend call. A bearish Tenkan/Kijun crossover followed by a move into the cloud would materially strengthen the short.

Stochastic (5/3/3) should provide the timing signal. The ideal setup is a bearish crossover from the upper-middle/overbought region while price rejects 1.1625–1.1630. If Stochastic instead turns higher and price establishes consecutive M15 closes above 1.1630, the probability shifts toward continuation.

The immediate downside targets are 1.1619, 1.1605, and then 1.1585. The critical invalidation area is 1.1632–1.1640. Given the ECB decision on Thursday and U.S. CPI on Friday, volatility is likely to increase substantially as the week progresses.

Trade Recommendation

Entry: 1.1625

Take Profit: 1.1595

Stop Loss: 1.1640

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