EURUSD Price Forecast: Anticipating a Downward Correction
Muhammad Faraz 
EURUSD Price Forecast Anticipating a Downward Correction
EURUSD’s price has recently faced rejection and consolidation around the 1.1640-1.1650 area. This price action suggests a bearish correction is forming after a recent uptrend. Our analysis projects a move towards a primary target of 1.1590, with a secondary, more significant target at 1.1460. This prediction is based on a confluence of technical factors, including a key resistance zone, bearish divergence potential on lower timeframes, and the identification of clear support levels below.
Current Market Structure and Price Action
The broader market structure for EURUSD has been bullish, making higher highs. However, the price is currently interacting with a strong resistance zone between 1.1640 and 1.1650. Recent price action has shown a failure to break decisively above this level, indicated by the cluster of daily closes near it and the presence of upper wicks. This indicates that buyer momentum is waning and a bearish correction or pullback may be imminent to gather strength for the next leg or reverse the trend.
Identification of the Key Resistance Zone
The most critical technical element is the Strong Resistance Zone around 1.1640-1.1650. The strength of this zone is derived from:
- Historical Significance: This level has acted as a major swing high and point of volatility in recent trading sessions, as visible on the provided chart.
- Technical Confluence: The zone aligns with a psychological round number (1.1650) and represents the recent peak of the rally, a classic area for profit-taking.
- Market Psychology: This area represents a point where bullish sentiment is being tested, and sellers may step in, seeing limited immediate upside.
This confluence makes it a high-probability level for a bearish reaction.
Technical Targets and Rationale
Our analysis identifies the following bearish price targets:
Primary Target (PT1): 1.1590
This level represents the first clear support zone below the current price. It is a logical initial target for a standard pullback and aligns with a minor previous consolidation area.
Secondary Target (PT2): 1.1460
This is a more significant target, acting as a stronger historical support and swing low base. A move to this level would represent a deeper correction into a high-value support area, offering a better risk/reward for counter-trend buyers or a trend continuation entry.
Prediction: We forecast that the price will reject from the current ~1.1640 resistance and move downwards towards PT1 at 1.1590. A sustained breakdown below this intermediate support would then open the path towards our final target at PT2, 1.1460.
Risk Management Considerations
A professional strategy is defined by its risk management.
- Invalidation Level (Stop-Loss): The entire bearish thesis is invalidated if the price achieves a decisive daily close above 1.1680. This level should be chosen above the recent resistance cluster and would signal a continuation of the bullish momentum, negating the corrective setup.
- Position Sizing: Any short positions or bearish bets taken should be sized so that a loss triggered at the invalidation level (~1.1680) represents a small, pre-defined percentage of your total capital (e.g., 1-2%).
Fundamental Backdrop
The technical setup is framed by the current fundamental landscape:
- Central Bank Policy Divergence: The market is weighing the European Central Bank’s (ECB) stance against the Federal Reserve’s (Fed) policy. Any hawkish signals from the Fed can strengthen the USD, pressuring EURUSD lower.
- Risk Sentiment: The US Dollar often acts as a safe-haven. A deterioration in global risk sentiment (equity market sell-off) could fuel USD strength, supporting our bearish correction outlook for the pair.
- Economic Data: Upcoming US GDP and PCE inflation data will be critical in shaping Fed expectations and could be the catalyst for the predicted move.
Conclusion
EURUSD is at a technical inflection point after testing key resistance. The weight of evidence suggests a bearish corrective resolution, initially targeting a move to 1.1590, with potential for an extension to 1.1460. Traders should monitor for confirmed bearish momentum (e.g., a break below 1.1600) and manage risk diligently by respecting the key invalidation level at 1.1680. The reaction at the 1.1460 target zone will be crucial for determining whether the broader bullish trend resumes or a deeper reversal begins.
Chart Source: TradingView
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. All trading and investing involves significant risk, including the possible loss of your entire investment. Always conduct your own research (DYOR) and consider seeking advice from an independent financial professional before making any trading decisions.
About the Author
