EUR/USD Price Analysis: Rejection at Strong Resistance Targets 1.1650
Muhammad Faraz 
EURUSD Price Analysis Rejection at Strong Resistance Targets 1.1650
The EUR/USD price has rallied from its lows but is now showing clear signs of stalling as it tests a significant and technically robust resistance zone between 1.17400 and 1.17600. This price action suggests a bearish bias is forming. Our analysis projects a rejection from this zone and a move towards a primary target of 1.16500. This prediction is based on a confluence of technical factors, primarily the strength of the current resistance area and the principle of “old support turning into new resistance.”
Current Market Structure and Price Action
The broader market structure for EUR/USD remains bearish, characterized by a series of lower highs and lower lows. The current rally is best classified as a corrective bounce within this larger downtrend. The price is now interacting with a technically significant resistance zone. Recent price action shows a loss of upward momentum and indecision (e.g., small-bodied candles, long wicks) near this zone, indicating that a rejection and breakdown may be imminent, which would resume the primary bearish trend.
Identification of the Key Resistance Zone
The most critical technical element on the chart is the potent Resistance Zone between approximately 1.17400 and 1.17600. The strength of this zone is derived from:
- Historical Significance & Role Reversal: This area previously acted as a strong support level. According to a core tenet of technical analysis, once a key support level is broken, it often flips to act as a strong resistance level. The price is now retesting this broken support, making it a classic setup for a bearish rejection.
- Technical Confluence: The zone is not a single line but a band that contains multiple prior price reaction points (e.g., 1.17400, 1.17600), adding to its significance. It also aligns with a key psychological level.
- Market Psychology: This area represents a point where sellers who missed the initial break lower are likely to re-enter, and buyers from the recent bounce are likely to take profits. This convergence of selling pressure creates a high-probability zone for a reversal.
Technical Target(s) and Rationale
Our analysis identifies the following price target(s):
Primary Target (PT1): 1.16500
Rationale: This level represents the most recent significant swing low that occurred just before the final push into the resistance zone. A break below the near-term support would likely target this level first. It also acts as a key psychological handle.
Secondary Target (PT2): 1.16000
Rationale: A more significant break below 1.16500 would open the path towards the more substantial support and psychological level at 1.16000. This would represent a full retracement of the recent corrective bounce and a resumption of the core bearish trend.
Prediction: We forecast that the price will be rejected from the 1.17400-1.17600 resistance zone and initiate a bearish impulse move, initially targeting 1.16500.
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 sustained daily close above the resistance zone, notably a close above 1.17600. This would indicate a failure of the bearish rejection and could signal a stronger corrective move higher, potentially towards 1.1800.
- Position Sizing: Any short positions considered should be sized so that a loss triggered at the invalidation level (1.17650) 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 primary driver of EUR/USD remains the policy divergence between the hawkish Federal Reserve and the more cautious European Central Bank. Any hints of a more dovish Fed or a more hawkish ECB could invalidate the technical setup.
- Risk Sentiment: As a risk-sensitive currency pair, EUR/USD is impacted by global risk appetite. A deterioration in risk sentiment typically benefits the safe-haven USD and weighs on the Euro.
- Economic Data: Upcoming key economic releases from both the US and the Eurozone (GDP, CPI, employment data) will be crucial for near-term direction and could trigger volatility around these technical levels.
These factors contribute to a neutral-to-bearish fundamental backdrop for the pair, which does not contradict the technical bearish bias.
Conclusion
EUR/USD is at a critical technical juncture, testing a strong resistance zone defined by historical price action and role reversal. The weight of evidence suggests a bearish resolution, targeting a decline to 1.16500. Traders should monitor for clear rejection signals (e.g., bearish engulfing patterns, pin bars) at this resistance zone before considering short entries. Risk must be managed diligently by respecting the key invalidation level above 1.17600. The reaction at the 1.16500 target will be crucial for determining whether the decline continues towards 1.1600.
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.
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