A Bullish Retracement Could Develop From the Current Local Support Zone

Summary:

This difference suggests that bearish momentum may be weakening and that sellers are showing less commitment to the current decline.

Buy EURUSD

End Time

CLOSED

1.11142

ENTRY

1.12850

TGT

1.10500

1.11561 -0.00230 -0.21%

712

Points

Profit

1.10500

1.11854

CLOSING

1.11142

ENTRY

1.12850

TGT

The Federal Reserve decided to keep its benchmark federal funds rate unchanged within the 3.75%–4.00% range. According to its statement, policymakers indicated that incoming economic data would help guide their next decision. During the press conference, Fed Chair Kevin Warsh said that officials had "made clear our readiness to act as circumstances warrant, and we have demonstrated our willingness to act."

"It is our responsibility to bring inflation down," Warsh stated. He added that this was why discussions during the latest two-day Federal Open Market Committee (FOMC) meeting had focused primarily on the price stability component of the Fed's mandate. His remarks highlighted the central bank's continued emphasis on controlling inflation while assessing the economic conditions that could influence its next policy decision.

The Fed acknowledged that economic activity continues to expand, noting that domestic spending "has been resilient, productivity growth is solid, and capital investment is robust." Regarding its employment mandate, the central bank stated that job growth had continued to keep pace with the labor force, while the unemployment rate had changed little. These assessments suggest that economic activity and labor market conditions remain relatively stable, leaving inflation as a key factor in determining the future direction of monetary policy.

The European Central Bank (ECB) is scheduled to announce its interest rate decision on Thursday. The central bank is widely expected to leave its deposit rate unchanged at 2.50%, following a cumulative 50-basis-point increase earlier this year. However, persistent energy-driven inflation has raised questions about whether policymakers could consider another rate hike in December, particularly if price pressures remain elevated.

Traders will therefore look for clues about the possibility of a December rate increase and how policymakers assess the balance between persistent energy-driven inflation and the risks to economic growth. The ECB's comments on these competing pressures could influence market expectations for the next stage of monetary policy and shape the euro's near-term direction. A Bullish Retracement Could Develop From the Current Local Support Zone_1

A Bullish Retracement Could Develop From the Current Local Support Zone_1

Technical Analysis

EURUSD rebounded from the 1.1114 area again during the previous session. The same level was tested on October 14, when the pair also recovered to the upside before eventually encountering dynamic resistance around the 100-period moving average. This moving average is now positioned at 1.1280, while the 200-period moving average stands higher at 1.1425. The 100-period average is particularly relevant because it aligns with a local descending trendline, creating a resistance zone that could limit the current recovery. However, if the pair manages to break decisively above this area, further upside movement could develop toward the local resistance level at 1.1287.

Looking at the oscillators, the Relative Strength Index (RSI) recently reached 24, creating a potential divergence compared with a previous test of the same price area, when the RSI was at a significantly higher level and closer to overbought territory. This difference suggests that bearish momentum may be weakening and that sellers are showing less commitment to the current decline. A decisive break below local support would still be necessary to confirm further downside continuation. Meanwhile, the MACD displays a histogram with almost no depth, while a bullish crossover appears to be approaching. However, the signal lines remain slightly below the neutral level, meaning that additional momentum and a deeper bullish histogram would be needed for the oscillators to align in support of a sustained upward movement.

Trading Recommendations

Trading direction: Buy

Entry price: 1.1115

Target price: 1.1285

Stop loss: 1.1050

Validity: Nov 06, 2026 15:00:00

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