EUR/USD Price Analysis: Bulls could be running into a trap

EUR/USD bearish W-formation remains is in focus in the build-up to US CPI.
Bulls could find themselves trapped in trying to break out through recent highs.

Ross J Burland FXStreet

EUR/USD is extending the bullish rally on Tuesday and has been trying to print a fresh high for this week's initial balance, taking the US Dollar down to 1.0759 vs. the Single Currency on the bull's quest for a test towards 1.0800.

However, as illustrated at the start of the week's technical analysis, EUR/USD Price Analysis: Breakout traders triggered long, bears looking to pounce, we have red news on the calendar on Thursday that marries up with a technically bearish fo5rmation on the charts as the following will illustrate. Bulls could be running into a trap and as analysts at Brown Brothers Harriman explained, who continue to believe markets are underestimating the Fed; ''it's hard to reconcile a risk rally with deep US yield curve inversion.''

EUR/USD technical analysis

In the prior analysis, it was explained that EUR/USD rallied towards a key resistance area but has started to slow in its ascent which leaves the focus on signs of distribution for the days ahead.

EUR/USD had reached up to test prior highs of 1.0736 and has moved into a critical resistance area as a potential last stop before the bears move back in. We have seen a bullish open for Tuesday but are yet to see a fresh high. Nevertheless, there is still time until Thursday's red news in the United States Consumer Price Index which leaves scope for a push towards 1.0800, although lacking a significant catalyst, this could be a tall order.

Zoomed in...

(Monday above, Tuesday, so far, below)

If the bears emerge below 1.0790, then the focus will be on signs of distribution again that will ultimately trap the breakout long positions.

The W-formation is supportive of such a thesis given that it is a reversion pattern. EUR/USD would be expected to revert towards the neckline and prior day's lows of near 1.0637. This could put the trendline support back under pressure and open the risk of a move below 1.0500 and on to test 1.0480, 0.0440 and then 1.0300 that guards 1.0290 and 1.0225 lower down.

In the meantime, bears will be on the lookout for the phenomenon of a sweep of the relatively equal highs towards, say, 1.0800, failures and a break of structure to the downside to change the character from bullish to bearish in the schematic. The lower time frames can be monitored for signs of buying exhaustion over the coming sessions. A long squeeze below 1.0750/36 could then be in order with US Consumer Price Index eyed as a potential catalyst on Thursday for this three-day set-up and potential bearish opportunity.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD nudges higher above 1.3350 despite Middle East turmoil

The GBP/USD pair rebounds to near 1.3385 during the Asian trading hours on Thursday. However, the potential upside for the major pair might be limited amid cooler-than-expected UK inflation data and escalating tensions in the Middle East. Traders will take more cues from the UK Retail Sales report, which is due later on Friday.

EUR/USD advances ahead of ECB policy decision

EUR/USD extends its gains for the second consecutive day, trading around 1.1410 during the Asian hours on Thursday. The pair gains ground as the Euro finds solid support ahead of the European Central Bank's upcoming interest rate decision.

Gold extends range play above $4,100 as inflation fears lift Fed hike bets and cap gains

Gold consolidates above the $4,100 round figure through the Asian session, and seems to have stalled its modest pullback from an over two-week high touched the previous day. Crude oil prices climb to a fresh high since June 11 amid a further escalation of tensions between the US and Iran, fueling inflation fears and bolstering US Fed interest rate hike expectations.

Hyperliquid, Robinhood could lead crypto’s next bull market as DeFi and TradFi converge

The next crypto bull market could be driven by the growing convergence between blockchain-based financial infrastructure and traditional finance, according to Bitwise CIO Matt Hougan. In a report published late Tuesday, Hougan argued that crypto may be showing early signs of a market bottom, with Bitcoin gaining 9% since July 1 even as the NASDAQ 100 declined 6%.

Ripple and Stellar await direction amid cautious sentiment

Ripple and Stellar trade cautiously as both tokens hover around key technical levels. XRP is testing resistance at its 50-day EMA, while XLM continues to consolidate around the $0.187 support zone. Meanwhile, mixed derivatives data with a slight bearish tilt suggests traders remain cautious, keeping the next directional move uncertain.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.