EUR/USD Rebounds From 17-Month Low as Dollar Loses Momentum

Traders' Opinions

Summary:

EUR/USD rebounds toward 1.1250 as lower oil prices and a softer Dollar provide relief. Weak European data and persistent fiscal concerns continue to cloud the Euro’s broader outlook.

BUY EURUSD

EXP

TRADING

1.12650

Entry Price

1.13500

1.11650

1.12524 +0.00307 +0.27%

0.0

Pips

Flat

1.11650

Exit Price

1.12650

Entry Price

1.13500

EUR/USD is attempting to recover on Tuesday, climbing back toward 1.1250 after touching a 17-month low near 1.1160 at the start of the week. The rebound has developed despite disappointing European economic figures, with a softer US Dollar and another decline in crude prices offering the Euro some breathing room.

Eurozone Retail Sales increased only 0.1% in August, missing expectations for 0.2% growth following July’s 0.6% contraction. On an annual basis, sales improved to 0.8%, but again fell short of the 1% forecast.

Germany delivered an even weaker signal. Factory Orders collapsed 10.6% in August after rising 3.2% in July. Much of the decline came from volatile large-scale transport equipment orders, which dropped 61%. Excluding these major contracts, orders slipped just 0.1%, suggesting the headline figure exaggerates some of the underlying weakness.

One source of relief for the Euro has been the continued retreat in energy prices. Brent has fallen below $98, almost 5% beneath last week’s highs, as recovering Gulf exports ease fears of prolonged supply shortages. Lower energy costs are particularly important for the Eurozone given its dependence on imported fuel.

Nevertheless, the broader backdrop remains difficult for the single currency. Concerns surrounding French public finances and elevated borrowing costs continue to weigh on sentiment, while political uncertainty across several major Eurozone economies adds another layer of caution. At the same time, the ECB faces a difficult balance between persistent inflation and the potential economic consequences of additional tightening.

The Dollar has also lost some immediate momentum after US ISM Services data showed activity slowing more than anticipated in September. However, historically elevated Treasury yields continue to provide underlying support for the Greenback.

For now, EUR/USD's move higher looks more like a recovery from heavily pressured levels than a decisive change in the broader trend. Lower oil prices and temporary Dollar weakness may allow the rebound to extend, but weak European data and fiscal concerns remain substantial obstacles.

Technical Analysis

EUR/USD is beginning to show signs of a short-term recovery on the 1-hour chart after sellers drove the pair toward the 1.1160 area. The rebound from those lows has produced a sequence of higher short-term lows, with price now accelerating toward 1.1270.

The immediate test is the 1.1270–1.1280 region. This level previously acted as support during the decline and is now the first barrier confronting the recovery. A brief rejection or pullback from this area would not necessarily invalidate the rebound. Holding above the 1.1215–1.1230 demand zone would keep buyers in position to make another attempt higher.

A decisive break through 1.1280 would strengthen the recovery considerably and expose the next major resistance cluster around 1.1350–1.1370. This is a more important technical ceiling and represents the primary upside objective shown by the projected move on the chart.

The broader structure is still recovering from a pronounced downtrend, so this should not yet be treated as a complete bullish reversal. Instead, the chart currently favours a corrective bullish phase, with the potential for price to reclaim some of the ground lost during the September selloff.

Failure to hold the 1.1215 region would undermine the recovery and bring 1.1160 back into focus. For now, however, the strong reaction from the lows and improving near-term structure favour further upside while support remains intact.

TRADE RECOMMENDATION

BUY EUR/USD

ENTRY PRICE: 1.1265

STOP LOSS: 1.11650

TAKE PROFIT: 1.1350

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EUR/USD Rebounds From 17-Month Low as Dollar Loses Momentum

Technical Analysis

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