EURUSD has staged a strong recovery from its July lows, but the broader trend remains bearish as prices approach a key resistance confluence formed by the descending trendline and the 1.1566 resistance zone, making this a pivotal area for the pair.

As long as EURUSD remains below 1.1566, the broader bearish outlook may remain intact. A rejection from this zone could attract renewed selling pressure and see the pair approach the support at 1.1501, with a break below this level exposing the recent swing low around 1.13534.

However, a sustained break above 1.1566, accompanied by a breakout above the descending trendline, would invalidate the current bearish structure. Such a move would suggest bullish momentum is strengthening and shift the focus towards the next resistance at 1.1622.
Overall, the technical outlook remains bearish as price trades below the descending trendline and the 1.1566 resistance zone.

Fundamentally, a resilient US economy and expectations that the Fed will maintain a relatively restrictive policy stance could continue to support the US dollar, while softer eurozone growth prospects may limit upside for the euro.

By Li Xing Gan, Financial Markets Strategist Consultant to Exness