With the greenback under pressure, we take a look at EUR/USD, which has just formed an inside day pattern at key resistance. As both macro headwinds and high-impact data loom, the next breakout or fakeout could set the tone for the week ahead.
Dollar under pressure ahead of high-stakes week
The dollar is reeling after Donald Trump reignited global trade tensions, pushing the currency to its weakest level in three years. His comments about reintroducing reciprocal tariffs within weeks have triggered a sharp decline in the greenback, which fell over 0.8% against a basket of major peers. Alongside this, geopolitical jitters over Iran and reports that the US may reassess its Aukus defence pact have further dampened sentiment, with traders increasingly questioning the strength of America’s international alliances.
The weakening in the dollar has been exacerbated by weaker-than-expected inflation, which has encouraged market participants to bet more heavily on interest rate cuts from the Fed later this year. Futures now price in two quarter-point cuts, undermining the dollar’s yield advantage. Meanwhile, the euro has found support from signs that the ECB may be nearing the end of its cutting cycle, adding relative strength to the single currency. All eyes now turn to Tuesday’s US industrial production figures, followed by EU inflation data and the Fed’s interest rate decision on Wednesday, as traders look for fresh direction.
Compression at resistance: All eyes on Thursday’s range
Last week’s rally saw EUR/USD push into a key level, with price retesting resistance created by the April highs. Although the pair briefly broke through on Thursday with a close above the level, Friday’s session was far more cautious. Price action stayed entirely within Thursday’s range, forming an inside day pattern that now acts as a pressure point for the next directional move.
This setup reflects a temporary standoff between bullish momentum and longer-term resistance. Inside days often precede breakouts, but they can also lure in traders only to reverse violently. The key now lies in how price reacts to the boundaries of Thursday’s range. A close above it, particularly on strong volume, would be a clear signal of continuation and likely invite further buying. A close below it on strong volume would mark a failed breakout and open the door to a short setup.
For those trading this setup, Thursday’s high and low now form essential levels. Not only do they serve as breakout triggers, but they also offer logical zones for stop placement. In short, the market is coiled, the fundamentals are volatile, and price is poised.
EUR/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
EUR/USD Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85.24% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Dollar under pressure ahead of high-stakes week
The dollar is reeling after Donald Trump reignited global trade tensions, pushing the currency to its weakest level in three years. His comments about reintroducing reciprocal tariffs within weeks have triggered a sharp decline in the greenback, which fell over 0.8% against a basket of major peers. Alongside this, geopolitical jitters over Iran and reports that the US may reassess its Aukus defence pact have further dampened sentiment, with traders increasingly questioning the strength of America’s international alliances.
The weakening in the dollar has been exacerbated by weaker-than-expected inflation, which has encouraged market participants to bet more heavily on interest rate cuts from the Fed later this year. Futures now price in two quarter-point cuts, undermining the dollar’s yield advantage. Meanwhile, the euro has found support from signs that the ECB may be nearing the end of its cutting cycle, adding relative strength to the single currency. All eyes now turn to Tuesday’s US industrial production figures, followed by EU inflation data and the Fed’s interest rate decision on Wednesday, as traders look for fresh direction.
Compression at resistance: All eyes on Thursday’s range
Last week’s rally saw EUR/USD push into a key level, with price retesting resistance created by the April highs. Although the pair briefly broke through on Thursday with a close above the level, Friday’s session was far more cautious. Price action stayed entirely within Thursday’s range, forming an inside day pattern that now acts as a pressure point for the next directional move.
This setup reflects a temporary standoff between bullish momentum and longer-term resistance. Inside days often precede breakouts, but they can also lure in traders only to reverse violently. The key now lies in how price reacts to the boundaries of Thursday’s range. A close above it, particularly on strong volume, would be a clear signal of continuation and likely invite further buying. A close below it on strong volume would mark a failed breakout and open the door to a short setup.
For those trading this setup, Thursday’s high and low now form essential levels. Not only do they serve as breakout triggers, but they also offer logical zones for stop placement. In short, the market is coiled, the fundamentals are volatile, and price is poised.
EUR/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
EUR/USD Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85.24% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.