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Dollar to reflect US economic data, Central Bank minutes, inflation in Brazil, and the Middle East
Leonel Mattos
- Currencies
EUR/USD Faces a Pivotal Test of Trend Strength
By: Michael Boutros, Sr. Technical Strategist
The euro dollar is entering a phase where momentum and structure are no longer perfectly aligned, creating a narrow window of opportunity for both risk and confirmation. Market participants see supportive rate expectations, yet the technical picture signals a potential shift in tone as the year begins. Stretched indicators at multi year highs increase the sensitivity of the pair to even modest fundamental surprises. This convergence of factors places unusual weight on how EURUSD behaves around familiar resistance.
Michael Boutros, Senior Market Analyst at FOREX.com, highlights how technical conditions and shifting rate expectations combine to define the euro dollar’s most important inflection point.
Key Themes
- Momentum signals have reached extremes consistent with earlier multi year turning points.
- Long term trend structure remains constructive while resistance zones tighten.
- The next range break will determine whether the advance resumes or corrects.
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Why Stretched Momentum Matters Now
Momentum extremes rarely occur without consequence, especially when they coincide with multi-year price structures that already carry heavy technical memory. Boutros notes that monthly RSI has reached levels “the highest... since 2021 and then 2018”, both of which preceded meaningful pauses in the broader trend. These signals do not negate strength but they do raise the probability of a corrective phase even within a constructive long-term backdrop. For traders, this blend of stability and strain heightens the importance of timing and confirmation.
How Structural Support Shapes the Path Forward
Despite momentum strain, the underlying structure of the euro dollar trend continues to offer a durable foundation for medium term positioning. Boutros emphasizes that the larger trend “still remains constructive while above the median line”, underscoring that the uptrend has not been technically compromised. What matters now is how the pair behaves at the well established resistance cluster that has capped progress since September. He points out that the 1.1775 to 1.1746 band forms a “critical range of resistance”, making the upcoming break a decisive signal for whether the advance continues or fades.
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--- Written by Frédéric Guétin, StoneX TV Producer
--- Expert: Michael Boutros, Senior Market Analyst, FOREX.com
- Currencies
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