Euro bulls delivered in June, but the current price action suggests an early July pullback.
Read today’s forecast for the key levels to watch, including details on the EURUSD pullback scenario, and get an update on the US Dollar Index (DXY).
EURUSD could have just closed its most bullish month in decades. The pair managed to close the June candle above 1.1500, which marks the bottom of a channel dating back to 1985.
Although the euro was introduced in 1999, the use of a pre-euro basket of currencies provides data dating back to the 1980s.
The euro broke channel support in 2022 and tested it as new resistance in 2023.
However, after spending several years below the 1985 channel, the EURUSD reclaimed it with Monday’s close.
That close also completed the second quarter candle, making it even more significant.
However, even the most bullish trends have pullbacks. EURUSD buyers were out in full force on Monday, making me wonder if they’re now trapped.
That could be the case, especially when we view the 4-hour channel from May.
The EURUSD broke above the channel on Monday as bulls chased the monthly close.
As I often say, bullish breaks of ascending levels usually fail.
If the euro closes a 4-hour candle back below 1.1790, we could have a confirmed buy-side fakeout, which is bearish.
From a liquidity standpoint, a EURUSD pullback in early July makes sense. There’s a sell-side single print from the June 25th expansion near 1.1648.
Areas of thin volume, like single prints, often serve as magnets for price. If true this time, we could see EURUSD trade into the 1.1630 highs, potentially even the 1.1580 lows.
Keep an eye on the DXY as well. Currently, 97.00 is the resistance level for the USD index, with a sustained break above opening up the 97.40 highs.
We could also see the DXY test 97.70 in early July, but only with bullish reclaims starting at 97.00. The confluence at 97.70 and the unfilled gap from late June could create an interesting reversal area if dollar bulls can break through the 97.00 resistance.