While USD weakness has largely been stalled since the Q3 open, there may be an opening door for the Dollar to test lower-lows and that has relation with the EUR/USD setup testing resistance at the top of a bull pennant formation.
While the fundamental backdrop in Europe isn't necessarily inspiring that's not required for the EUR/USD pair to show strength, very similar to what we saw back in Q3 of 2024, when EUR/USD marched up to the 1.1200 handle as markets were pricing in US rate cuts. At that point, the pair stalled at the big figure and then a massive reversal took over in DXY in Q4, leading to a 1,000+ pip fall in the EUR/USD pair.
As we came into last year it seemed like there were party calls everywhere, but that didn't come to pass as a reversal took over in the USD in March and that drove EUR/USD to fresh highs.
But since hitting resistance on the first day of Q3, 2025, EUR/USD bulls haven't been able to do much, and the pair has largely been meandering in a range around the 1.1686-1.1748 Fibonacci levels. In the mirror image of that, the US Dollar has largely been stalled near lows.
In EUR/USD, there remains some structural issues and as we've seen over the past four months, bulls have shied away from fresh highs as that 1.2000 handle looms large overhead. But at this point, there's a bull pennant formation, which gives a directional lean to an otherwise non-directional formation of the symmetrical triangle. With Core PCE tomorrow, there's even some backdrop for what could lead to that break, if we see inflation come out soft in the US. But, bigger picture, for bears to re-take control here they're going to need to make a lasting move below the 1.1500 handle, which has proven to be a tough spot on the chart for sellers to leave behind. - js
While the fundamental backdrop in Europe isn't necessarily inspiring that's not required for the EUR/USD pair to show strength, very similar to what we saw back in Q3 of 2024, when EUR/USD marched up to the 1.1200 handle as markets were pricing in US rate cuts. At that point, the pair stalled at the big figure and then a massive reversal took over in DXY in Q4, leading to a 1,000+ pip fall in the EUR/USD pair.
As we came into last year it seemed like there were party calls everywhere, but that didn't come to pass as a reversal took over in the USD in March and that drove EUR/USD to fresh highs.
But since hitting resistance on the first day of Q3, 2025, EUR/USD bulls haven't been able to do much, and the pair has largely been meandering in a range around the 1.1686-1.1748 Fibonacci levels. In the mirror image of that, the US Dollar has largely been stalled near lows.
In EUR/USD, there remains some structural issues and as we've seen over the past four months, bulls have shied away from fresh highs as that 1.2000 handle looms large overhead. But at this point, there's a bull pennant formation, which gives a directional lean to an otherwise non-directional formation of the symmetrical triangle. With Core PCE tomorrow, there's even some backdrop for what could lead to that break, if we see inflation come out soft in the US. But, bigger picture, for bears to re-take control here they're going to need to make a lasting move below the 1.1500 handle, which has proven to be a tough spot on the chart for sellers to leave behind. - js
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