EUR/USD Outlook for the Week

This week starts off with a bullish trend for EUR/USD as hopes for a potential peace deal between the US and Iran are affecting the US dollar’s (USD) status as a safe haven. The pair may inch upwards toward the mid-1.1600s during the Asian trading hours. However, it’s wise to approach with some caution, especially after a modest recovery from last Thursday’s drop to about 1.1575, the lowest point since early April.

From a technical standpoint, EUR/USD is maintaining its position above the 23.6% Fibonacci retracement level from that April-May decline. The Relative Strength Index (RSI) currently hovers around 58, and there’s a slightly positive indication from the Moving Average Convergence Divergence (MACD), suggesting some upward momentum. This might open the door for additional short-term gains, although the Federal Reserve’s hawkish stance could still limit the dollar’s losses and impact spot prices.

Any potential rally, though, may encounter resistance around the 38.2% Fibonacci level, situated between 1.1675 and 1.1680. Beyond that, there’s a notable confluence at 1.1710, which combines a 200-period simple moving average (SMA) with the 50% retracement level on the 4-hour chart. This zone may well define the upper limit of the current short-term trend. If the EUR/USD can break above it, targets could include the 61.8% retracement level near 1.1740 and the 78.6% retracement at 1.1785, aiming for a cycle high at 1.1842.

On the flip side, the immediate support seems to rest at the 23.6% retracement near 1.1638. There’s also a significant Fibonacci structural anchor around 1.1574; breaching this point would likely restart a broader bearish trend.