EURUSD has broken below a long-term rising trend line that had been guiding price higher since mid-2025, signaling that a deeper correction or even a full trend reversal could be in the cards. Price is currently trading around 1.1601 and is in the middle of a correction that suggests that bearish momentum is far from spent.
The broken trend line itself adds a compelling bearish narrative. A retest of this structure, which now converges near the 38.2% Fib and the 200 SMA, could attract a fresh wave of sellers looking to fade any relief rally at a technically meaningful level.
A larger correction could see price hit a ceiling at the 61.8% Fib at 1.1831 or the 50% level at 1.1753. If so, the next logical downside target is the 0% Fibonacci level at 1.1421, which also corresponds to a significant horizontal support zone that previously acted as a springboard for the broader rally.
The 100 SMA has crossed below the 200 SMA, confirming that the path of least resistance has shifted decisively to the downside. Both indicators are now positioned above current price, reinforcing the overhead resistance picture and reducing the likelihood of a swift recovery.
Stochastic has bounced from oversold territory and is heading higher with room to climb, suggesting that a corrective pullback toward the broken Fibonacci levels is possible before sellers take another swing.
RSI is also recovering from oversold conditions, which could fuel a short-term bounce. However, until the oscillator reclaims the 50 level convincingly, the broader bearish bias remains firmly in play.
EURUSD appears to have been weighed down by mixed eurozone PMI readings contrasting with some degree of resilience in the US flash PMI surveys, though both economies are flashing stagflation signals. Still, the dollar retains some advantage due to its safe-haven status and relatively hawkish Fed bias based on data improvements.